Oil prices fell sharply on Monday after US President Donald Trump downplayed the likelihood of renewed strikes on Iran, though attacks on ships near the Strait of Hormuz kept supply concerns in focus.
Brent crude slid by $3.49, or 3.6%, to $94.83 a barrel by 1219 GMT while US West Texas Intermediate lost $2.66, or 2.9%, to $88.17.
The Brent benchmark plunged by 16% last week to touch a two-month low of $93.22, marking its its steepest weekly drop since the start of the COVID-19 pandemic.
“Oil continues to trade lower on hopes of a US-Iran peace deal rather than concrete signs of progress,” said Saxo Bank analyst Ole Hansen, adding that US President Trump’s latest comments that fresh strikes on Iran are highly unlikely have added to the pressure on prices.
UBS analyst Giovanni Staunovo said: “Weakness in the physical market, supported by still-elevated flows out of the Middle East, is one factor weighing on prices.”
Trump said on Sunday that he was highly unlikely to order
fresh attacks on Iran as long as talks to end the conflict
progressed, even as both countries reported that shipping had
been hit in or near the Strait of Hormuz.
He had hinted at renewing attacks on Iran after last
week’s US midterm elections, but there has been no sign of a
large-scale US military operation. Iran has said it would
respond by striking US and Israeli targets.
Tim Waterer, chief analyst at KCM Trade, called Trump’s
comments “more measured” but said the market is still waiting to
see whether the midterms have produced a lasting shift in
Trump’s approach to the conflict, or whether this is just
another temporary change in tone.
Oil is headed for a glut again as recovering Middle Eastern
oil flows, rising production from other countries and weak
demand have pushed global supply above consumption, JPMorgan
said in a report on Friday, estimating a surplus of 1.1 million
barrels per day in September, widening to 1.4 million bpd in
October.
Separately, the Iran-aligned Houthis said they were
responsible for an attack on Saudi Aramco’s offices in Riyadh on
Sunday.
Elsewhere, Russia’s Kirishi oil refinery was set on fire
after a Ukrainian drone attack on the region on Monday, Governor
Alexander Drozdenko said.
Source: Khaleej Times