Oil prices fell on Monday after US President Donald Trump played down the chances of fresh strikes on Iran. Attacks on ships near the Strait of Hormuz, however, kept worries about supply in view.
Brent crude dropped 75 cents, or 0.75%, to $97.57 a barrel by 1011 GMT. US West Texas Intermediate fell 38 cents, or 0.4%, to $90.45. Brent had already slumped 16% last week, its steepest weekly decline since the COVID-19 pandemic began.
Trump’s softer tone weighs on crude
Trump said on Sunday that he was highly unlikely to order new attacks on Iran while talks to end the conflict continued. Both countries had reported that shipping was hit in or near the Strait of Hormuz, however. He had hinted at renewed strikes after last week’s US midterm elections, but no large-scale US military operation has followed. Iran has said it would respond by striking US and Israeli targets.
Also read: Iran warns it will 'rain down hell' if US resumes strikes
Saxo Bank analyst Ole Hansen said oil was trading lower on hopes of a US-Iran peace deal rather than clear progress toward one. He added that Trump‘s latest remarks that fresh strikes were highly unlikely had put additional pressure on prices.
Supply glut outlook and midterm uncertainty
UBS analyst Giovanni Staunovo said weakness in the physical market, supported by still-high flows out of the Middle East, was one factor weighing on prices. Tim Waterer of KCM Trade called Trump’s comments “more measured”. He said the market was still waiting to see whether the midterms had brought a lasting shift in approach or only a temporary change in tone.
JPMorgan said in a report on Friday that oil was heading for a glut again. Recovering Middle Eastern flows, rising output from other countries and weak demand have pushed global supply above consumption. The bank estimated a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October.
Attacks on Saudi Aramco and a Russian refinery
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, according to Governor Alexander Drozdenko.
