Global oil prices fell on Monday after United States President Donald Trump played down the likelihood of renewed strikes on Iran, easing immediate concerns about further escalation in the Middle East, although attacks on vessels near the Strait of Hormuz continued to threaten supply routes.
Brent crude dropped by $1.65, or 1.7 per cent, to $96.67 a barrel, while United States benchmark West Texas Intermediate declined by 96 cents, or one per cent, to $89.87.
The decline followed Trump’s remarks on Sunday that fresh attacks on Iran were highly unlikely if negotiations to end the conflict continued to progress.
The comments helped ease concerns among traders about further military action, although uncertainty remains over whether diplomatic efforts will produce an agreement between Washington and Tehran.
Despite the price decline, attacks on shipping in and around the Strait of Hormuz have kept concerns about global oil supplies in focus. Both the United States and Iran reported that vessels had been hit near the strategic waterway.
The Strait of Hormuz is a major route for international oil shipments, making any disruption to maritime traffic a significant risk to global energy markets.
Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, said the market appeared to be anticipating a reduction in tensions despite the absence of a comprehensive agreement.
“The (oil) market appears to be pricing in a relatively optimistic scenario of de-escalation, even though a comprehensive agreement between Washington and Tehran has yet to materialise,” she said.
Sachdeva added that crude prices could continue to carry a geopolitical risk premium without a diplomatic breakthrough and sustained normalisation of shipping through the Strait of Hormuz.
Meanwhile, Brent crude recorded a 16 per cent decline last week, its steepest weekly fall since the beginning of the COVID-19 pandemic.
Market pressures have also been linked to rising global oil supplies and weaker demand. JPMorgan estimated that global oil production exceeded consumption by 1.1 million barrels per day in September, with the surplus expected to widen to 1.4 million barrels per day in October.
Elsewhere, Iran-aligned Houthi forces claimed responsibility for an attack on Saudi Aramco’s offices in Riyadh on Sunday, while a Ukrainian drone attack sparked a fire at Russia’s Kirishi oil refinery on Monday, according to regional authorities.
Ademide Adebayo
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