Brent: Risk premium holds as Iran uncertainty lingers – ING

ING analysts Warren Patterson and Ewa Manthey maintain that Brent oil prices are holding near $114 as market participants await more information on President Trump's Iran policy following the US midterm elections. The analysts contend that the market has factored in a higher probability of a re-escalation, but an absence of renewed strikes on Iran after the vote could lead to a reduction in Brent's risk premium.

Oil prices have edged lower over the past two days, settling for a second consecutive day. Despite Brent currently trading around $114 per barrel, oil prices remain elevated as the market anticipates greater clarity on the next move by President Trump towards Iran. The recent upward trend in oil prices indicates that the market is pricing in a greater likelihood of re-escalation.

Official confirmation of an agreement between the US and Iran is not necessary for prices to decline; the absence of renewed strikes on Iran could suffice to erode the market's risk premium. The middle distillate market is weakening, with the ICE gasoil crack trading close to $70 per barrel, marking its lowest level since early October.

Diesel markets have softened following Russia's recent lifting of its diesel export ban, as part of a deal with Trump to supply more diesel to global markets. Russia, a significant diesel exporter, has been under pressure due to Ukrainian attacks on its refineries, leading Russia to impose a diesel export ban earlier this year. US crude oil inventories have declined by approximately 2 million barrels in the past week, while gasoline and distillate fuel oil inventories have increased by 2.3 million and 420,000 barrels, respectively.

The more widely followed Energy Information Administration (EIA) weekly report will be released later today. (This article was created with the help of an AI tool and reviewed by an editor.) FXStreet Insights, a team of journalists, highlights notable market observations from expert sources, incorporating commercial insights and additional perspectives from internal and external analysts.

AUD/USD is attracting buyers for the second consecutive day, reaching a new high since September 23 during the Asian session. The Australian Dollar benefited from a strong CPI print, supporting bets for an imminent RBA rate hike in November. Concurrently, the US Dollar paused after a three-day rally to a near two-week high ahead of the crucial Federal Open Market Committee (FOMC) rate decision, providing further support to the currency pair.

USD/JPY is also attracting buyers for the third straight day, recovering from a one-month low ahead of the FOMC decision and the Bank of Japan's policy update on Friday. Market expectations that the Bank of Japan may refrain from aggressive rate hikes weigh on the Japanese Yen, and the US Dollar's advance to a nearly two-week high supports the currency pair.

Gold has extended its retracement slide from its weekly high touched during the Asian session, falling further below $4,050 as it enters the European session and ahead of the key central bank event. The US Federal Reserve is set to announce its policy decision later today, with expectations that rates will remain unchanged. Thus, the focus will be on the accompanying policy statement and remarks from Fed Chair Kevin Warsh during the post-meeting press conference.

Zcash is continuing its steady recovery above $1,300, nearing a key resistance level around $1,373. Grayscale’s ZEC-focused Exchange-Traded Fund (ETF) has seen persistent buying pressure, with six consecutive days of inflows, including over $3 million on Tuesday.