Oil prices fell again on Monday after President Donald Trump downplayed the likelihood of renewed strikes on Iran, even as attacks on ships near the Strait of Hormuz kept supply concerns in focus, Reuters reported. Brent crude dropped 75 cents, or 0.75 percent, to 97.57 dollars a barrel by 1011 GMT, after an earlier print of 96.67 dollars, down 1.7 percent, at 0830 GMT. US West Texas Intermediate lost 38 cents, or 0.4 percent, to 90.45 dollars.
The fall extends the steepest weekly drop since the start of the COVID-19 pandemic. Brent plunged 16 percent last week, and the selling has continued into the new week on diplomacy rather than on any confirmed change in physical flows. 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. He had hinted at renewing attacks after last week’s US midterm elections, but Reuters noted there has been no sign of a large-scale US military operation, and Iran has said it would respond by striking US and Israeli targets.
Analysts quoted by Reuters split the move between hope and physical softness. Ole Hansen of Saxo Bank said oil continues to trade lower on hopes of a US-Iran peace deal rather than concrete signs of progress, with Trump’s comments adding to the pressure. Giovanni Staunovo of UBS pointed the other way, to weakness in the physical market supported by still elevated flows out of the Middle East. Tim Waterer of KCM Trade called Trump’s comments more measured but said the market is still waiting to see whether the midterms produced a lasting shift in his approach or another temporary change in tone.
The fundamental backdrop is loosening on JPMorgan’s numbers. The bank said in a report on Friday that oil is headed for a glut again as recovering Middle Eastern flows, rising production elsewhere and weak demand push supply above consumption, estimating a surplus of 1.1 million barrels a day in September widening to 1.4 million barrels a day in October.
The risks that built the premium have not disappeared. The Iran-aligned Houthis said they were responsible for an attack on Saudi Aramco’s offices in Riyadh on Sunday, and Russia’s Kirishi oil refinery was set on fire after a Ukrainian drone attack on the region on Monday, its governor said. Neither development stopped the futures market from selling the talks.