Oil drops more than 4% on talks aimed at ending US-Iran war
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
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LONDON, Nov 2 : Oil fell more than 4 per cent on Monday as talks between Iranian and Qatari officials on a deal to end the US-Israeli war on Iran raised hopes that Middle East supply disruptions could ease.
Iranian negotiators held days of talks with Qatari mediators aimed at ending the war with the United States, and a draft proposal is being circulated with a follow-up meeting possible, an official briefed on the talks said on Monday.
Brent crude futures fell $4.77, or 4.2 per cent, to $108.66 a barrel by 1250 GMT while US West Texas Intermediate crude traded down $4.29, or 4.1 per cent, at $99.83.
Brent ended October at its highest in six months on concerns that the Middle East conflict could escalate again after Tuesday’s US midterm elections.
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“Lingering hopes of some form of diplomatic progress, combined with the absence of any meaningful military escalation over the weekend, have taken some of the immediate heat out of prices for now,” said Tim Waterer, chief market analyst at KCM Trade.
Iranian Foreign Minister Abbas Araqchi said on Sunday that the purpose of the talks was to continue consultations with the Qatari mediators, adding that Tehran was prepared for “both defence and diplomacy”.
The talks followed a recent increase in attacks on oil tankers passing the Strait of Hormuz, though there have also been signs of shipments rising from some major exporters.
Saudi Arabia’s crude exports in October increased from September despite attacks by Iran-aligned Yemeni Houthis on its energy infrastructure, two of three ship-tracking companies said.
The outbreak of the Iran war at the end of February has depleted oil stocks. The world has drained nearly 1 billion barrels from inventories since the war disrupted shipping through the Strait of Hormuz, said the chief executive of ADNOC, Abu Dhabi’s state-owned oil company.
Oil could rise further, some analysts say. Goldman Sachs raised its price forecasts on Sunday owing to elevated supply risks and said Brent could jump to $140 in 2027 if Gulf oil output remains 3.5 million barrels per day below its 2025 average.
“Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside,” the bank said in a report.
Source: Reuters
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