Oil prices fall for fourth day amid declining chances of Iran war escalation - Sarmad
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Oil prices dropped amid expectations of reduced likelihood of military escalation against Iran following the US election results.
Translated by Qiyas from سرمد — Original source
Oil prices fell on Thursday for the fourth consecutive day, amid expectations that losses suffered by the Republican Party, to which US President Donald Trump belongs, in this week’s congressional elections could reduce the likelihood of an escalation in the US-Israeli war against Iran.
Brent crude futures fell 97 cents, or 1.03 percent, to $93.65 per barrel by 0211 GMT, while US West Texas Intermediate crude futures dropped $1.14, or 1.29 percent, to $86.98.
The two benchmarks fell by more than 8 percent in the previous session, closing at their lowest levels since August 31.
Two sources close to Gulf government circles said on Wednesday that Trump, now in a weaker position with the new Democratic-led Congress able to constrain his military options, has greater incentive to seek a deal. They added that a full-scale attack on Iran now appears less likely.
Ending the conflict would lead to a resumption of oil flows from the Middle East affected by the war, although analysts stress that the future outlook remains unclear.
According to analysts, crude oil shipments through the Strait of Hormuz have recovered to levels close to pre-war figures, albeit at a higher cost.
JPMorgan said in a note on Wednesday that the resumption of supplies from the Gulf has returned the global oil market to a surplus, after months of disruptions caused by the war.
According to JPMorgan’s estimates, the market saw a surplus of 1.1 million barrels per day in September, which widened to 1.4 million barrels per day in October, approaching last year’s average of 1.3 million barrels per day.
However, the sharp drop in oil prices may be short-lived.
Mukesh Sadani, CEO of energy consultancy Xenergi, responded to a question about whether prices are likely to remain low after the elections with a brief “no.”
Sadani pointed out that geopolitical risks remain difficult to predict. He noted that the new Congress will not take office until January, meaning US policy options will not change immediately.
He also clarified that commercial oil stocks in major consuming countries are approaching their lowest levels in 15 years. He said Iran may emerge from the US election results with greater determination in its positions.
The US Energy Information Administration announced on Wednesday that US crude oil, gasoline, and distillate inventories all fell last week, while demand reached its highest level in a year.
