Oil prices fell about 1% on Thursday as the recovery of crude exports from the Gulf eased concerns over global supplies, while investors watched renewed diplomatic efforts between the United States and Iran aimed at ending the conflict in the Middle East.

Brent crude futures were down 1.1% at $96.92 a barrel by 0420 GMT, while U.S. West Texas Intermediate crude fell 1.4% to $89.18 a barrel.

The decline came after both benchmarks gained about $1 a barrel on Wednesday, as markets continued to assess the impact of the conflict on oil production, exports and transportation routes across the region.

Signs that Gulf crude exports were recovering helped reduce some of the immediate supply concerns that had pushed prices higher in recent weeks. A surprise increase in U.S. crude inventories also added pressure to prices by suggesting that supplies in the world’s largest oil consumer may be more comfortable than previously expected.

Despite Thursday’s decline, oil ended September with significant gains. Brent rose about 14% during the month, its strongest monthly increase since July, while WTI gained roughly 5%.

The market is now closely watching diplomatic efforts involving Washington and Tehran. Any progress toward an agreement could reduce concerns about prolonged disruption to Middle Eastern energy supplies and potentially put further downward pressure on crude prices.

At the same time, investors remain focused on developments in the Gulf, where the pace of crude exports and the security of major energy routes remain important factors for global markets.

Oil prices have become particularly sensitive to changes in the region as traders assess the balance between physical supply disruptions, inventory levels and the possibility of a diplomatic resolution.

For consumers and businesses, sustained changes in crude prices can eventually influence fuel costs, transportation expenses and inflation, although the impact varies by market and depends on refining, taxes and other factors.

Thursday’s decline therefore reflects a market attempting to balance two competing forces: signs of improving supply on one side and continuing geopolitical uncertainty on the other.