Oil prices ease to settle near 4-week low on hopes peace talks will end wars
Both oil benchmarks closed lower for the day
Oil prices dropped around 1% on Tuesday (Nov 3) to their lowest level in nearly four weeks, as traders considered the prospects for peace talks to end the wars in Ukraine and Iran, alongside concerns over possible further supply disruptions from recent attacks in both conflicts. The market is also keeping an eye on the upcoming US midterm elections, with polls and analysts predicting the Democrats could win control of the House of Representatives while the Senate remains unclear.
Brent futures fell by US$1.17, or 1%, to settle at US$103.60 per barrel, marking their lowest close since October 7. US West Texas Intermediate crude dropped by 37 cents to settle at US$96.09, their lowest since October 14. Iran and the US remain far from a deal to resolve their war, according to a senior Iranian official. Qatar is stepping up efforts to prevent an escalation following the US midterm elections, with the country's Foreign Ministry spokesperson stating that both the US and Iran are committed to mediation efforts and reviewing proposals to bridge their differences.
Nonetheless, ING warns that while positive signals exist, it is premature to assume escalation risks have diminished. The US recently carried out strikes on Iran's Qeshm Island, targeting surface-to-air missiles used against US assets, though another official noted that the strikes appeared limited and did not signal a return to major combat operations.
Separately, US President Donald Trump announced a deal with Israeli Prime Minister Benjamin Netanyahu, promising to stop US$4 billion in funding to Israel after the end of the year. Saudi state oil company Aramco is working on expanding a crude pipeline that bypasses the Strait of Hormuz, said CEO Amin Nasser. The blockade of this chokepoint, which previously accounted for 20% of global oil supplies, has altered energy flows and investment priorities among the region's oil producers.
Russia is set to hold three-way peace talks with Ukraine and the US in Abu Dhabi from November 10 to 11. The Kremlin confirmed that Russia would be one of the participants. Sanctions aimed at keeping Russian energy out of global markets since Moscow's invasion of Ukraine have helped maintain high oil prices. However, any agreement to end Russia's invasion could allow Russia to resume exports.
Recently, Russia has bombarded Ukraine's energy infrastructure with missiles and drones, causing widespread power outages and setting fire to an oil refinery in Yaroslavl, Russia. The escalating maritime conflict between Russia and Ukraine in the Black Sea poses a significant challenge for NATO. Meanwhile, Venezuela's oil exports remained stable at 1.08 million barrels per day in October, despite stagnant production and high freight rates.
The market will soon receive weekly storage reports from the American Petroleum Institute and the US Energy Information Administration, with analysts estimating that energy firms added 0.9 million barrels of crude to US storage during the week ending October 30. If accurate, this would be the first increase in crude stocks in five weeks.
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