Oil prices fell on Monday due to remarks by Donald Trump, the President of the United States, about the reduced likelihood of further military strikes against Iran. These comments alleviated concerns about a renewed escalation of conflicts. However, continued attacks on commercial shipping in the Strait of Hormuz and Houthi assaults on Saudi infrastructure have heightened worries about oil supply.
Oil Price Volatility
According to reports, at 03:18 Eastern Time (08:18 GMT), Brent crude oil for January delivery fell to $96.55 per barrel, a decrease of 1.8 percent. Additionally, West Texas Intermediate (WTI) crude oil dropped 1.2 percent to $89.78 per barrel. Brent oil prices have decreased by about 16 percent over the past week, marking the steepest weekly drop since the onset of the COVID-19 pandemic.
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Impact of U.S. Midterm Elections
Donald Trump stated in an interview with CNN that he is unlikely to decide on further strikes against Iran, provided negotiations move towards a strong agreement. These remarks helped to immediately reduce concerns about military escalation and brought some buyers back to the market after last week's sharp decline. Additionally, the success of the Democratic Party in the U.S. midterm elections has created expectations for increased congressional pressure on Trump to end this conflict.
Shipping Tensions in the Strait of Hormuz
Meanwhile, Iranian media reports indicate that no ships passed through the Strait of Hormuz on Sunday, as Tehran announced that navigation aid systems in the southern part of the waterway had been damaged. Furthermore, Iranian-aligned Houthis reported an attempt to attack the Aramco office in Riyadh, which resulted in damage to the building, but there were no reports of human casualties.
Iraq has also announced that it has reached an agreement with Washington to transfer Iraqi crude oil through the Strait of Hormuz. Iraqi exports in October increased to about 3.5 million barrels per day, up from 2.65 million barrels per day in September. However, the Iraqi Foreign Minister estimated that war and export disruptions have cost the country's economy about $60 billion.
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