Oil prices fell in trading on Tuesday, November 9, continuing the downward trend from the previous day. Statements by Donald Trump, the President of the United States, indicating that he does not see a necessity for military action against Iran at this time, have reduced traders' concerns about escalating tensions and disruptions in regional oil supply.
Decrease in Brent and WTI Oil Prices
The price of a barrel of Brent crude oil fell by 70 cents, or 0.75%, to $91.88. Additionally, West Texas Intermediate (WTI) crude oil dropped by 78 cents, or 0.9%, trading at $86.07 per barrel. Both oil benchmarks experienced a one percent drop at one point during Tuesday's trading. Brent oil also saw a 5.85% price decrease on Monday, reaching its lowest level since August 31.
Read more: NABEP has begun the pipeline replacement project in Lake Maracaibo
Decreased Concerns Over Escalating Tensions
Donald Trump announced on Monday that, following requests from regional countries, including the Prime Minister of Qatar during White House negotiations, he currently does not intend to carry out new military strikes against Iran. Trump emphasized in discussions with the media that the U.S. will continue its maritime blockade in the Strait of Hormuz.
Tim Waterer, a senior market analyst at KCM Trade, stated that the oil market continues to prioritize Trump's softer and more conciliatory tone towards Iran, adopted after the U.S. midterm elections. He added that although attacks on commercial vessels around the Strait of Hormuz continue, these attacks have not yet reached a level that would significantly increase the risk premium in oil prices.
In terms of supply, survey results indicate that OPEC oil production increased in October. This growth was primarily influenced by increased production from Saudi Arabia, Kuwait, and Iraq, although export restrictions remain in place.
Since reaching a six-month high of $118 on October 30, Brent oil prices have decreased by about 22%. The reduction in concerns over the likelihood of increased U.S. attacks against Iran following the midterm elections has been a key factor in the price retreat.
However, concerns about potential disruptions in shipping routes and oil transportation remain. Gregory Brew, a senior analyst at the Eurasia Group, noted in a memo that despite the recent price drop, it is unlikely that Brent oil will fall below $90 per barrel without seeing more sustainable signs of reduced tensions and an agreement between the U.S. and Iran.
In another development, Russian and Ukrainian officials are set to begin two days of negotiations mediated by the U.S. on Tuesday. This will be the first round of talks between the two countries since February.
Overall, the global oil market is facing price declines as the U.S. adjusts its stance towards Iran and OPEC increases supply, putting downward pressure on prices, while ongoing geopolitical uncertainties and existing threats to shipping security in the Strait of Hormuz prevent further and sustained price drops.
Read more: TC Energy has approved two natural gas projects with a capacity of 2.4 Bcf/d · Fluctuations in Brent and West Texas crude oil prices in the global market
