Oil prices edged lower on Tuesday, extending the previous day’s losses. The move followed comments from US President Donald Trump that military action against Iran is not necessary at this point. The remarks eased fears of long-lasting disruption to supplies from the Middle East.
Brent crude futures fell 24 cents, or 0.23%, to $92.33 a barrel by 0102 GMT. US West Texas Intermediate (WTI) futures slipped 35 cents, or 0.40%, to $86.50 a barrel. Brent had already dropped sharply in the previous session, settling down 5.85% after touching its lowest level since August 31.
Trump holds off on strikes
Trump said on Monday that he would hold off on fresh military strikes against Iran for now. He made the decision after appeals from countries in the region, including a request raised by Qatar’s prime minister during talks at the White House.
Speaking in a Reuters interview and later at a White House press briefing, Trump said he intends to keep a naval blockade in the Strait of Hormuz in place for the time being.
Analysts said the market was reacting to the change in tone. Tim Waterer, chief market analyst at KCM Trade, said traders were focusing on Trump’s more conciliatory approach towards Iran since the midterms. He noted that attacks on shipping around the Strait of Hormuz are still taking place. However, they have not escalated enough to push a new risk premium into prices.
Peace hopes remain doubtful
Senior US and Gulf officials have cast doubt on the prospect of a peace agreement between Washington and Tehran in the near term.
Iran’s security council chief, Mohsen Rezaei, said the United States should stop spreading false reports about talks that do not exist. He added that it was time for Washington to accept the seven conditions Iran has repeatedly put forward.
Supply picks up
On the supply side, OPEC oil output rose in October, according to a Reuters survey. The increase was led by Saudi Arabia, Kuwait and Iraq, even though exports remain restricted.
Russia and Ukraine return to the table
Outside the energy market, Russian and Ukrainian officials were set to meet on Tuesday for two days of talks brokered by the United States. These will be their first direct discussions since February.
The talks follow Trump’s suggestion last week that a broad peace deal could be reached to end the conflict, which has now lasted four and a half years. He also indicated that such a deal could include security arrangements for Europe.