Oil falls almost 5% as Trump signals restraint on Iran
USO•Brent crude futures fell 4.65% to $93.75 a barrel and U.S. WTI fell 3.51% to $87.64 after Donald Trump said he was highly unlikely to order fresh attacks on Iran if talks progressed. Brent dropped 16% last week, its steepest weekly decline since April 2020.
1. Oil prices retreat
Brent crude futures fell $4.57, or 4.65%, to $93.75 a barrel by 12:04 p.m. EDT, after touching a session low of $92.80. U.S. West Texas Intermediate futures fell $3.19, or 3.51%, to $87.64. Brent plunged 16% last week, its steepest weekly drop since the start of the COVID-19 pandemic.
2. Iran talks and security
The decline followed President Donald Trump’s statement that he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed, although attacks on ships near the Strait of Hormuz continued. A senior Iranian security official said Tehran had no plans to negotiate unless Washington took practical steps to meet seven conditions in a June interim agreement. Iraq said it had reached understandings with the United States to allow oil exports through the strait via a shipping lane near Oman.
3. Supply signals
Dated Brent weakened to a discount to nearby futures, which Morgan Stanley said highlighted weakness in the physical market. JPMorgan estimated the global oil surplus at around 1.4 million barrels per day in October. OPEC output rose by 1.38 million barrels per day in October to 22.87 million barrels per day, a Reuters survey found.
