Key Moments
- Brent crude fell 1.5% to $96.91 a barrel and US WTI declined 1% to $89.85 a barrel by 0629 GMT.
- Brent dropped 16% last week, marking its sharpest weekly loss since the onset of the COVID pandemic.
- JPMorgan estimated a global oil surplus of 1.1 million barrels per day in September, expanding to 1.4 million bpd in October.
Market Reaction to Trump’s Comments on Iran
Oil prices moved lower on Monday as investors reacted to US President Donald Trump’s remarks playing down the prospect of additional strikes on Iran, even as fresh incidents involving vessels near the Strait of Hormuz kept supply risks in the spotlight.
| Contract | Price | Move | Time (GMT) |
|---|---|---|---|
| Brent crude | $96.91 per barrel | -1.5% | 0629 |
| US WTI | $89.85 per barrel | -1% | 0629 |
By 0629 GMT, Brent crude was down 1.5% at $96.91 a barrel, while US West Texas Intermediate traded 1% lower at $89.85 a barrel.
Brent had already dropped 16% over the previous week, described as its largest weekly decline since the beginning of the COVID pandemic.
Analysts See De-escalation Priced In
Sugandha Sachdeva, founder of SS WealthStreet, a research firm based in New Delhi, said the market has shifted toward a more constructive view on geopolitical risks.
“The (oil) market appears to be pricing in a relatively optimistic scenario of de-escalation, even though a comprehensive agreement between Washington and Tehran has yet to materialise,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
She added that crude is still likely to carry a geopolitical risk premium until there is a substantial diplomatic breakthrough and a durable improvement in maritime movements through the Strait of Hormuz.
“Unless there is a meaningful diplomatic breakthrough accompanied by a sustained normalisation of shipping flows through the Strait of Hormuz, crude oil prices are likely to retain a geopolitical risk premium, with near-term support seen at $93 a barrel for Brent,” she said.
Trump Tones Down Strike Rhetoric
Trump signaled on Sunday that he was very unlikely to authorize new attacks on Iran as long as efforts to resolve the conflict continued, even as both sides reported that shipping had been struck in or close to the Strait of Hormuz.
The president had previously suggested he might resume attacks on Iran following last week’s US midterm elections, but so far there has been no indication of a broader US military campaign. Iran has stated it would answer any such action by targeting US and Israeli assets.
Tim Waterer, chief analyst at KCM Trade, said Trump’s latest remarks marked a shift in tone.
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.”
Emerging Signs of an Oil Surplus
Beyond the immediate geopolitical backdrop, analysts highlighted evolving fundamentals in the physical oil market. According to a report released Friday by JPMorgan, global supply has moved above demand as flows from the Middle East recover, other producers lift output, and consumption weakens.
The bank estimated that the market showed a surplus of 1.1 million barrels per day in September, widening to 1.4 million barrels per day in October.
Regional Security Risks: Houthis Claim Riyadh Attack
In a separate development, the Iran-aligned Houthi group said it was behind an attack on offices of Saudi Aramco in Saudi Arabia’s capital, Riyadh, on Sunday. The incident reportedly damaged windows but did not result in any reported casualties.
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