Oil prices fell at Monday’s open after US President Donald Trump said he was highly unlikely to order new Iran attacks while talks to end the conflict make progress, despite both nations’ reports of attacks on ships in or near the Strait of Hormuz.
Brent was down 84 cents, or 0.85%, to $97.48 a barrel by 0138 GMT, while West Texas Intermediate fell 32 cents, or 0.35%, to $90.51 a barrel.
The fall reversed minor gains made on Friday’s settlement as the market assessed the possibility of further US strikes on Iran, although Brent fell 17% last week, the steepest weekly drop since the start of the COVID pandemic and the biggest in absolute terms, according to LSEG data dating back to 1988.
“It depends on whether or not they sign a very strong agreement,” Trump told CNN in a phone interview. “The answer is, highly unlikely it’s going to be necessary.”
Trump had hinted at renewing attacks on Iran after last week’s US midterm elections, but there has been no sign of a large-scale US military operation. Iran has said it would respond by striking US and Israeli targets.
Tim Waterer, chief analyst at KCM Trade, called Trump’s comments “more measured” but said “the market is still waiting to see whether the midterms have produced a lasting shift in Trump’s approach to the conflict, or whether this is just another temporary change in tone.”
Oil is headed for a glut again as recovering Middle Eastern oil flows, rising production from other countries , and weak demand have pushed global supply above consumption, JPMorgan said in a report on Friday, estimating a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October.
On Sunday, Iraq reached an understanding with the US to allow Iraqi oil exports through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said in an interview with Al Jazeera.
He said Iraq’s losses from the Iran war and disruptions to oil exports had reached $60 billion.
Separately, the Houthis claimed responsibility for an attack on Saudi Aramco’s offices in the capital, Riyadh, on Sunday that left windows blown out but no reported casualties.