Brent falls almost 5% as Trump plays down fresh strikes on Iran
Brent crude fell almost 5% on Monday to $93.75 a barrel, touching $92.80 at its session low, after US President Donald Trump said he was highly unlikely to order fresh strikes on Iran so long as talks to end the conflict progressed. The benchmark had already lost 16% last week, its steepest weekly drop since the start of the COVID-19 pandemic.
US West Texas Intermediate fell $3.19, or 3.51%, to $87.64. The selling came even as both countries reported shipping had been hit in or near the Strait of Hormuz. "This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down," TACenergy analysts said in a note.
Security risks remain unresolved. The Houthis claimed responsibility for Sunday's attempted attack on Saudi oil giant Aramco's corporate office in Riyadh, where the Saudi energy ministry said debris blew out windows across several floors. A fire was extinguished after the kingdom's East-West pipeline was struck, an Energy Ministry source said, with no casualties and no effect on operations. "Fresh tanker incidents and an attack on Saudi Aramco's offices show that shipping and regional security risks remain unresolved as traders price in a less disruptive outcome," said Gelber Associates.
Diplomacy is moving slowly. A senior Iranian security official told state media that Tehran has no plans to negotiate unless Washington takes practical steps to meet seven conditions set out in a June interim agreement, while senior US and Gulf officials cast doubt on the chances of an imminent deal. Trump meets the prime minister of Qatar, a mediator, on Monday. Iraq has reached understandings with the US to allow its oil exports through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said, according to Token Times.
Supply is loosening. JP Morgan estimated the global oil surplus at around 1.4 million barrels per day in October, and an OPEC survey found the group's output rose 1.38 million bpd to 22.87 million bpd, led by Saudi Arabia, Kuwait and Iraq. Morgan Stanley said Dated Brent had weakened to a discount to nearby futures, highlighting softness in the physical market, while US Strategic Petroleum Reserve stocks fell to 279.5 million barrels, the lowest since October 1982, according to Department of Energy data.
