Oil falls as report says Trump to give Iran diplomacy more time
Brent slipped towards US$111 a barrel after jumping more than 2% on Oct 30.
Oil prices experienced a decline after a report surfaced indicating that US President Donald Trump intends to grant diplomacy additional time before determining whether to resume strikes on Iran following the November 3 midterm elections. The price of Brent crude slipped towards $111 per barrel, while West Texas Intermediate approached $102.
Trump communicated his preference for diplomacy to Benjamin Netanyahu during a phone conversation, a move that raised concerns for Israeli Prime Minister Netanyahu, as reported by Axios. The two nations initiated hostilities in late February with coordinated assaults on Iran.
On October 31, US Secretary of State Marco Rubio asserted that no decision had been made regarding further strikes, and that Trump favored a diplomatic resolution. The push for talks helped alleviate worries about renewed hostilities, even as attacks on vessels in the Strait of Hormuz persisted. Despite a surge in crude flows through Hormuz, the global benchmark surged in October, hitting a six-month high.
Although Trump affirmed during the week that peace negotiations were underway, he has repeatedly threatened to revert to strikes on Iran post-midterms.
According to Florence Schmit, a senior energy strategist at Rabobank, this temporary reduction in prices is expected. Trump was briefed on military options by a top commander last week, according to the Wall Street Journal. "This is a temporary pullback" in prices, Schmit added, emphasizing that heightened geopolitical risks could potentially drive oil prices upward.
Iran's Supreme Leader, Mojtaba Khamenei, ordered his top military commanders to prepare for renewed confrontation with the US and Israel, while his foreign minister indicated progress in diplomatic discussions. An Iranian delegation was present in Qatar for talks with mediators on October 31.
UK Maritime Trade Operations (UKMTO) received a report that a ship was struck by a projectile in Hormuz, following an attack on a liquefied natural gas tanker on October 30. UKMTO also reported a vessel struck east of Ras Al Khafji, Saudi Arabia, deep within the Persian Gulf. Although crude exports from the Persian Gulf are nearing prewar levels, oil product shipments remain restricted.
The Middle East conflict, combined with escalating Ukrainian attacks on Russian refiners, has contributed to higher fuel prices, notably diesel in the US and Europe. In response, Goldman Sachs Group raised its Brent forecast to $105 per barrel for December and an average of $88 in 2027, citing heightened geopolitical supply risks.
Analysts Daan Struyven and Yulia Grigsby, in a note, highlighted that the Middle East conflict, along with the Russia-Ukraine conflict, and broader geopolitical fragmentation, pose significant disruption risks.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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