Oil steadies after Trump signals restraint on Iran, Hormuz risks persist

Oil prices stabilized on November 9 after US President Donald Trump signaled a willingness to refrain from new strikes on Iran. Despite this positive development, supply concerns persisted due to ongoing risks of attacks on ships near the strategic Strait of Hormuz. Brent crude rose 3 cents to $98.35 a barrel by 12:27pm Singapore time, while US West Texas Intermediate gained 0.5% to $91.30 a barrel.

However, Brent had fallen 16% the previous week, marking the steepest weekly decline since the onset of the Covid-19 pandemic.

Experts noted that while the market seemed to price in a relatively optimistic scenario of de-escalation, the underlying geopolitical risks remained high. Sugandha Sachdeva, founder of SS WealthStreet, stated that a comprehensive agreement between Washington and Tehran had not yet materialized. Trump had hinted at potential military action after the US midterm elections, but there had been no indication of a large-scale US military operation.

Iran has threatened retaliation against US and Israeli targets. Tim Waterer, chief analyst at KCM Trade, described Trump's remarks as more measured, but emphasized that the market was still awaiting confirmation of whether the midterms had produced a lasting shift in Trump's approach to the conflict or if it was merely a temporary change in tone.

Oil production from Middle Eastern countries was increasing, while demand remained weak, leading JPMorgan to estimate a supply surplus of 1.1 million barrels per day in September, expanding to 1.4 million barrels per day in October. Additionally, the Iran-aligned Houthi group claimed responsibility for an attack on Saudi Aramco's offices in Riyadh on November 8, which left windows shattered but did not result in any reported casualties.