Oil Falls to Lowest Since August on Iran De-escalation Hopes

Oil prices fell further on Tuesday (Nov 10), extending a slide to their lowest levels since late August after US President Donald Trump said a new attack on Iran was highly unlikely while talks to end the conflict continue, Reuters reported.

Brent crude futures were down 70 cents, or 0.75%, at US$91.88 a barrel at 0246 GMT, while US West Texas Intermediate (WTI) fell 78 cents, or 0.90%, to US$86.07, according to Reuters.

Steep slide in prices

On Monday (Nov 9), Brent settled down US$5.75, or 5.85%, at US$92.57 a barrel, and WTI settled down US$3.98, or 4.38%, at US$86.85, Reuters and The Nation reported. Both kept falling after settlement, with Brent at one point down more than US$7.

Brent dropped 16% the previous week, its steepest weekly fall since the start of the Covid-19 pandemic, according to Reuters. It is now about 22% below its six-month high of US$118 reached on Oct 30.

Reuters said Trump would hold off on new strikes for now after appeals from regional countries, including Qatar’s prime minister, a mediator, though the US naval blockade in the Strait of Hormuz remains in place. Senior US and Gulf officials doubted a deal was imminent, and a senior Iranian security official said Tehran would not negotiate unless Washington took practical steps on seven conditions from a June interim agreement.

Iraq’s Foreign Minister Fuad Hussein said Baghdad had reached understandings with the US allowing Iraqi oil exports through Hormuz via a shipping lane near Oman, Reuters reported. Attacks on shipping in and near Hormuz have continued.

Oil supply signals and markets

Morgan Stanley said Dated Brent had slipped to a discount to nearby futures, a sign of weak physical demand, according to Reuters. JPMorgan estimated the global oil surplus at about 1.4 million barrels per day in October, while a Reuters survey found OPEC output rose 1.38 million bpd in October to 22.87 million bpd.

“The market continues to prioritise President Trump’s more conciliatory tone toward Iran,” Tim Waterer of KCM Trade told Reuters.

The fall in oil eased inflation concerns, according to Reuters and Bloomberg. The war with Iran, which began at the end of February, had pushed major central banks to raise interest rates in recent months, Reuters said.

Asian stocks rose on Tuesday, with South Korea’s Kospi up more than 5%, Japan’s Nikkei about 3% and the MSCI Asia-Pacific index 1.5% higher, Reuters reported. On Wall Street on Monday, the S&P 500 closed up 2.35%, its biggest one-day gain since April, though much of the rally reflected a rebound in AI and chip stocks.

What’s next

Markets are watching US October consumer price data due on Tuesday, Reuters said, with a Reuters poll expecting a 0.3% rise in the headline index. Eurasia Group’s Gregory Brew told Reuters Brent is unlikely to fall below US$90 without more durable signs of de-escalation and a US-Iran deal.

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