Trump Bombs Iran, Talks Peace, and Sends Oil Prices Tumbling
Brent slipped below $105 this morning following a flurry of headlines suggesting growing momentum in U.S.-Iran peace talks, only for Tehran to subsequently dismiss the reports. US Midterms Give Oil Markets a Brief Diplomatic Reprieve - The steep backwardation seen across global crude oil benchmarks has started to flatten as markets sought to digest news of Qatar-mediated talks between the US and…
Trumps decision to launch defensive strikes on Iran s Qeshm island has further fueled the ongoing US-Iran negotiations, causing global crude oil prices to plummet below $105 per barrel. The steep backwardation in oil benchmarks has flattened, indicating that markets are digesting the news of the peace talks between the US and Iran. As a result, differentials across Asia are expected to decrease soon.
The flattening of the forward curve has also led to a decrease in freight rates from the US-controlled Gulf of Oman, with a voyage to China assessed at around $17 per barrel - a drop of $6 per barrel from a month ago. Meanwhile, Brent CFDs in European markets transitioned from contango to backwardation from December onwards, as oversupply in the prompt market continued.
Global crude on water has risen to 1.3 billion barrels by early November, with 80% of the increment coming from Middle Eastern countries. This surge in exports is a result of the potential restart in US-Iran hostilities, maximizing Middle Eastern oil production before the conflict resumes. Oil giants such as TotalEnergies, ExxonMobil, BP, and Petrobras have been involved in various deals and discoveries, impacting the global oil market.
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