Oil prices fell on Monday after US President Donald Trump downplayed the likelihood of renewed strikes on Iran, though attacks on ships near the Strait of Hormuz kept supply concerns in focus.
Brent crude dropped by 75 cents, or 0.75 per cent, to $97.57 a barrel by 10:11GMT while US West Texas Intermediate lost 38 cents, or 0.4 per cent, to $90.45.
The Brent benchmark plunged 16 per cent last week for its steepest weekly drop since the start of the Covid-19 pandemic.
“Oil continues to trade lower on hopes of a US-Iran peace deal rather than concrete signs of progress,” said Saxo Bank analyst Ole Hansen, adding that US President Trump’s latest comments that fresh strikes on Iran are highly unlikely have added to the pressure on prices.
UBS analyst Giovanni Staunovo said: “Weakness in the physical market, supported by still-elevated flows out of the Middle East, is one factor weighing on prices.”
Trump said on Sunday that he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed, even as both countries reported that shipping had been hit in or near the Strait of Hormuz.
He 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.
Separately, the Iran-aligned Houthis said they were responsible for an attack on Saudi Aramco’s offices in Riyadh on Sunday.
Elsewhere, Russia’s Kirishi oil refinery was set on fire after a Ukrainian drone attack on the region on Monday, Governor Alexander Drozdenko said.
