USO•USO•Brent crude futures settled down 5.85% at $92.57 a barrel and later fell more than $7, while U.S. crude settled down 4.38% at $86.85 and later fell more than $5. The declines followed Trump saying he was highly unlikely to order fresh attacks on Iran if talks progressed.
Brent crude futures settled down $5.75, or 5.85%, at $92.57 a barrel on Monday and continued falling after settlement, last down more than $7. U.S. West Texas Intermediate futures settled down $3.98, or 4.38%, at $86.85 and were later down more than $5. Brent had fallen 16% the previous week, its steepest weekly drop since the start of the COVID-19 pandemic.
Trump said Sunday he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed. Shipping was still reported hit in or near the Strait of Hormuz, and an Iranian security official said Tehran had no plans to negotiate unless Washington took practical steps to meet seven conditions. Iraq said it had reached understandings with the United States to allow oil exports through the strait via a shipping lane near Oman.
Dated Brent, used to price cargoes, weakened to a discount to nearby Brent futures, highlighting weakness in the physical market. Analysts cited signs of excess supply as demand fell; JPMorgan estimated the global oil surplus at about 1.4 million barrels per day in October. OPEC output rose by 1.38 million barrels per day in October to 22.87 million, while U.S. Strategic Petroleum Reserve crude stocks fell to 279.5 million barrels, their lowest level since October 1982.
