Oil prices fell on Tuesday, extending losses from the previous session after US President Donald Trump downplayed the need for additional military action against Iran “at this point,” easing fears of sustained supply disruptions from the Middle East.
Brent crude futures declined 1.7% to $90.99 a barrel at 0759 GMT, while US West Texas Intermediate (WTI) futures fell 1.8% to $85.20 a barrel. Both benchmarks had fallen about 2% in the session.
Brent settled down 5.85% in the previous session after sliding to its lowest since August 31.
Trump said on Monday he plans to hold off on new military strikes against Iran for the time being after appeals from countries in the region, including from Qatar’s prime minister in White House talks.
Trump, in a Reuters interview and a later appearance in the White House press briefing room, said he plans to keep up a naval blockade in the Strait of Hormuz for now.
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“The market continues to prioritise President Trump’s more conciliatory tone toward Iran since the midterms,” said Tim Waterer, chief market analyst at KCM Trade.
“While attacks on shipping around the Strait of Hormuz are still occurring, they have not escalated in a way that has forced a fresh risk premium into the market,” he said.
On the supply side, OPEC oil output rose in October, a Reuters survey found, led by gains in Saudi Arabia, Kuwait and Iraq despite continued constraints on exports.
Brent has retreated about 22% from the six-month high of $118 it touched on October 30 as fears that Trump might step up attacks on Iran following the US midterms have eased, however there is still concern shipping could be disrupted.
“Despite the recent selloff, prices are unlikely to fall below $90 per barrel for Brent without more durable signs of de-escalation and a US-Iran deal,” Gregory Brew, a senior analyst with Eurasia Group said in a note.
“At the same time, risks to shipping remain high, as Iran continues to attack vessels transiting the Strait of Hormuz,” Brew said.
Elsewhere, Russian and Ukrainian officials planned to meet on Tuesday for two days of US-brokered talks — their first since February — after Trump suggested last week that a broad peace deal was possible in their 4-1/2-year-old war and could incorporate Europe’s security.
