WTI Falls 0.8% to $89.79 on De-Escalation Bets
Key Facts
West Texas Intermediate futures fell 73 cents, or 0.8%, to $89.79 a barrel by 08:26 GMT on November 6, after posting early gains in a volatile session. Reuters, citing Euronext, linked the price direction to rising hopes for de-escalation in the U.S.-Israeli war with Iran after Republican losses in the midterm elections. De-escalation could open the way for increased crude exports from the Middle East, adding supplies to the oil market. WTI was headed for a weekly decline of more than 13%, while Brent was on track to fall 16%. That would be Brent’s biggest relative weekly drop since the start of the COVID-19 pandemic.
Those expectations followed an 8% drop in oil on Wednesday, November 4, when prices settled at their lowest in two months after Democrats swept the midterm elections. The Associated Press said Democratic control of the Senate was called on Tuesday night, November 3, followed by control of the House in the early hours of Wednesday, November 4. The agency said voters had expressed discontent over rising prices, the war with Iran and concerns about government corruption. The electoral shift provided political context for pricing the possibility of a change in the course of the confrontation, as Reuters linked oil losses to expectations that the result could create room for de-escalation. Axios said Wednesday’s decline, which reached about $8 a barrel, deepened after a post by Vice President JD Vance on X. Axios quoted a Raymond James analyst as saying the post’s significance as a sign of a more conciliatory stance toward Iran remained unclear.
On the supply side, Middle Eastern spot crude premiums returned to pre-conflict levels, Reuters reported, signaling a market surplus. A Rystad analyst said the crude market was heading toward a surplus based on supply and demand balances. But the analyst said crude quality differences and shipping constraints near the Strait of Hormuz continued to affect market activity. The return of premiums to previous levels suggests less competition for spot cargoes than during the conflict, while exports from the region could rise if de-escalation takes hold. This shift in supply is putting pressure on prices as contracts were headed for steep weekly losses. The Rystad analyst said the market was still waiting for evidence of a firm agreement on Iran.
But supply risks remained in focus as attacks on oil tankers in the Gulf and Strait of Hormuz increased. Data from the United Kingdom Maritime Trade Operations agency, cited by Reuters, indicated that attacks on oil-carrying vessels remained near record levels. The director of a Greek ship-management company said a seafarer was killed in an explosion on November 5 aboard an oil-products tanker in the Gulf, which was believed to have been caused by a missile attack. The developments brought concern about oil flows from the region back to the forefront of the market, despite bets on higher exports. A Rystad analyst also said any party’s response to the course of negotiations could tighten market fundamentals again. That leaves the possibility of supply disruptions as a factor in oil pricing alongside expectations of a supply surplus.
The supply disruption traces back to an earlier price peak during the conflict: The National said Brent futures briefly topped $126 a barrel in late April before easing as talks to end the crisis progressed. The U.S. Energy Information Administration put the average Brent spot price at $114 a barrel in September, up $23 from August, amid attacks on oil infrastructure and tankers. The daily spot price reached $131 a barrel on September 15 after a temporary disruption to Saudi Arabia’s East-West pipeline. Disrupted crude production averaged 4.8 million barrels per day in September, down from 5.8 million in August, after peaking at 10.9 million in May. Global refinery runs fell by 4.8 million barrels per day, or 6%, in the second quarter of 2026, then rose by 1.8 million barrels per day in the third quarter as refineries adapted to new trade routes. Even so, third-quarter runs remained about 5% below the same period in 2025 on average, according to the EIA.
The outlook depends on Washington’s decision on Iran and whether negotiations produce a firm agreement. President Donald Trump said he would decide after consulting national security advisers whether to resume attacks on Iran or seek an agreement. He told reporters that, if possible, he preferred not to destroy what remained of the country, but did not rule it out. In its forecast for the final quarter of 2026, the EIA estimated an average Brent spot price of $105 a barrel, based on continued restrictions on Middle East oil flows. The agency expects most of the region’s production to return to its pre-conflict average by the end of the second quarter of 2027, with Brent averaging $87 in that quarter. A Rystad analyst said any party’s response could tighten market fundamentals again if the course of negotiations changes.