Brent crude fell below 90 dollars a barrel early on Tuesday for the first time since August, as President Donald Trump again signalled potential de-escalation in the Middle East and no need for further strikes against Iran. Front month Brent futures dropped to 89.70 dollars in early European trade, and West Texas Intermediate traded below 85 dollars, down more than 2 percent, after dipping below 92 dollars at the start of Asian trading on reports that Trump was not planning to attack Iran at this point.
The move extends the steepest selloff since 2020. Brent tumbled 17 percent last week, its biggest weekly decline since the COVID pandemic weeks, and has now fallen about 25 percent from its late October peak above 117 dollars, according to Ole Hansen, head of commodity strategy at Saxo Bank, as hopes for an end to the eight month conflict strengthened after the US midterm elections.
The site market tables, updated at 06:00 Eastern on Tuesday, carried Brent at 90.84 dollars, down 1.87 percent on the day and 12.32 percent on the week, with WTI at 85.39 dollars, down 1.68 percent. Tanker freight fell 13.82 percent on the day to 583.03 dollars, down 36.11 percent on the week, a physical market signal that the war premium in shipping is unwinding alongside the futures premium.
The risks underneath the premium have not vanished. The Houthis continue to target Saudi energy infrastructure, with the latest attack again hitting the East West pipeline, where a Saudi energy ministry official said a limited fire was extinguished. Hansen noted that while crude flows have almost returned to pre war levels, LNG and refined product supplies remain constrained, keeping prices elevated, particularly for diesel.
Tuesday’s catalyst stack is domestic as much as geopolitical. The US October consumer price report is due later on Tuesday, and cheaper oil has eased the inflation backdrop against which the Federal Reserve’s December decision is being priced.