LONDON: Oil prices fell on Tuesday, extending the previous session’s losses after US President Donald Trump played down the prospect of further military action against Iran for now, easing concerns over prolonged supply disruptions in the Middle East.
Thank you for reading this post, don't forget to subscribe!Brent crude futures dropped 70 cents, or 0.75 per cent, to $91.88 per barrel by 0246 GMT, while US West Texas Intermediate (WTI) crude declined 78 cents, or 0.90 per cent, to $86.07 per barrel. Both benchmarks had fallen around 1 per cent earlier in the session.
Brent settled 5.85 per cent lower in the previous session after touching its lowest level since August 31.
Trump said on Monday that he would hold off on additional military strikes against Iran for the time being, following appeals from regional countries, including Qatar’s prime minister during talks at the White House. However, he indicated that the US naval blockade in the Strait of Hormuz would remain in place.
“The market continues to prioritise President Trump’s more conciliatory tone toward Iran since the midterms,” said Tim Waterer, chief market analyst at KCM Trade.
He added that although attacks on shipping around the Strait of Hormuz were continuing, they had not escalated enough to trigger a fresh risk premium in oil prices.
On the supply side, OPEC oil production increased in October, according to a Reuters survey, with higher output from Saudi Arabia, Kuwait and Iraq despite continued export constraints.
Brent crude has declined around 22 per cent from its six-month high of $118 per barrel recorded on October 30, as concerns over a possible escalation of US military action against Iran following the midterm elections have eased. Nevertheless, uncertainty surrounding shipping through the strategically important Strait of Hormuz continues to support market concerns.
Gregory Brew, senior analyst at Eurasia Group, said in a note that Brent prices were unlikely to fall below $90 per barrel without more lasting signs of de-escalation and progress towards a US-Iran agreement.
He cautioned that shipping risks remained elevated as Iran continued to attack vessels transiting the Strait of Hormuz.
Meanwhile, Russian and Ukrainian officials were scheduled to begin two days of US-brokered talks on Tuesday, their first such meeting since February. The discussions follow Trump’s recent suggestion that a broader peace agreement could be possible, potentially incorporating Europe’s security arrangements.
By Reuters
