Oil prices fell on Monday after President Donald Trump played down the chance of new strikes on Iran. Attacks on ships near the Strait of Hormuz kept supply concerns in focus, and diplomacy remains uncertain.
Oil prices fell 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 dropped $1.65, or 1.7%, to $96.67 a barrel by 0830 GMT. US West Texas Intermediate lost 96 cents, or 1%, to $89.87.
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. The Brent benchmark plunged 16% last week, its steepest weekly drop since the start of the COVID-19 pandemic.
Shipping attacks continue around Hormuz
Iranian media reported that no vessels transited the Strait of Hormuz on Sunday after Tehran said navigational aid systems in the southern part of the waterway had been destroyed. Separately, the United Kingdom Maritime Trade Operations agency reported that an outbound tanker was struck by an unidentified projectile in the strait.
The Iran-aligned Houthis said they were responsible for an attack on Saudi Aramco's offices in Riyadh on Sunday. Saudi authorities said falling debris damaged windows across several floors of the building, with no casualties reported.
Diplomacy makes little headway
Trump is scheduled to meet Qatar's prime minister on Monday to discuss mediation, but Secretary of State Marco Rubio said negotiations had made little headway and an agreement was not imminent. Iranian Foreign Minister Abbas Araghchi said mediators had stopped travelling between the parties after the US election results.
According to Reuters, Sugandha Sachdeva, founder of research firm SS WealthStreet, said the market appears to be pricing in "a relatively optimistic scenario of de-escalation". Unless a diplomatic breakthrough comes with a sustained normalisation of shipping flows, she said, crude prices are likely to retain a geopolitical risk premium, with near-term support seen at $93 a barrel for Brent.
JPMorgan said global supply has moved above consumption and estimated a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October.
Sources: Reuters via Investing.com, Investing.com
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