Oil prices extended losses from the previous session on Tuesday after US President Donald Trump downplayed the need for additional military action against Iran, easing fears of sustained Middle East supply disruptions, with prospects of oversupply also in focus.
Brent crude futures were down $2.39, or 2.58% at $90.18 a barrel by 0930 GMT. US West Texas Intermediate (WTI) futures fell $2.11, or 2.43% to $84.74.
The Brent benchmark dropped below $90 on Tuesday for the first time since August 31, having settled down 5.85% in the previous session.
Trump said on Monday that he plans to hold off from new
military strikes against Iran after appeals from countries in
the region, including from Qatar’s prime minister.
“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.
“While attacks on shipping around the Strait of Hormuz are
still occurring, they have not escalated in a way that has
forced a fresh risk premium into the market.”
In the physical crude oil market, the dated Brent
benchmark, against which roughly two thirds of oil supply is
priced, has weakened in recent weeks.
The global oil market is showing signs of a return to excess
supply as demand drops because of high prices, some analysts
said. The global surplus is estimated at around 1.4 million
barrels per day in October, JPMorgan said in a report last week.
On the supply side, OPEC oil output rose in October, a
Reuters survey found, led by gains in Saudi Arabia, Kuwait and
Iraq despite continued constraints on exports.
Brent has retreated about 23% from the six-month high of
$118 it touched on October 30 as fears that Trump might step up
attacks on Iran after the US midterms have eased, though
concerns remain over potential shipping disruption.
Elsewhere, Russian and Ukrainian officials planned to meet
on Tuesday for US-brokered talks — their first since February —
after Trump suggested last week that a broad peace deal was
possible after four and a half years of conflict.
Source: Khaleej Times