Oil Drops to Lowest Since August After Trump Signals No Further Iran Attack May Be Needed; WTI Near $86

Oil fell to its lowest level since August after US President Donald Trump signaled that further attacks on Iran may not be necessary.

Bloomberg reported on November 9 that US West Texas Intermediate crude slid to around $86 a barrel after plunging more than 4% in the previous session. Brent crude traded near $93 a barrel. The decline followed Trump's remarks that additional military action against Iran might not be needed, easing concerns over oil supply disruptions in the Middle East.

Trump made the comments at the White House a day earlier after meeting with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani. "Iran is effectively finished militarily," Trump said. He added that while the US is prepared to take further military action, an actual strike is unlikely.

Expectations are also rising that the war with Iran could end sooner after the US midterm elections. With Democrats securing majorities in both chambers of Congress, they are reportedly considering ways to use the December 11 federal government shutdown deadline to pressure the Trump administration to end the war.

Brent has fallen sharply from the six-month high it reached in late October. Last week, excluding the impact of futures expiry, it posted its biggest weekly drop since April 2020. Robert Yawger, head of energy futures at Mizuho Securities USA, said the rapidly shifting political landscape in the US and Israel is fueling doubts about whether there is political will to sustain a long-term blockade of Iran.

Still, uncertainty remains over whether negotiations can produce a deal. US Secretary of State Marco Rubio gave a pessimistic assessment of the chances for a breakthrough with Iran. Tehran is demanding an end to the US maritime blockade and sanctions relief, while Washington is pressing Iran to halt attacks on vessels in the Strait of Hormuz and make concessions on its nuclear program.

Military tensions in the Middle East have not fully eased. Saudi Arabia's state news agency reported that an attack on the East-West pipeline in the Medina region on November 9 caused a small fire that was later extinguished. Political instability in Israel is also emerging as a variable in any negotiations to end the war.

Markets are also watching monthly reports due this week from major energy agencies. The US Energy Information Administration is scheduled to release its oil market outlook on November 10, OPEC on November 11 and the International Energy Agency on November 13.