Oil Falls 16% for the Week as Washington-Tehran Talks and Hormuz Risks Loom
Key Facts
Oil prices fell after US President Donald Trump played down the prospect of renewed strikes on Iran, but supply concerns persisted as attacks on ships near the Strait of Hormuz continued. Reuters said prices retreated on Monday after Trump’s remarks, while maritime attacks kept shipping risks in focus for the market. The move followed Brent crude’s biggest weekly decline since the start of the COVID-19 pandemic in the week ended November 6. The drop totaled 16% that week, according to Reuters. The market move reflects a lower assessment of escalation risk, without meaning that risks to the flow of oil and goods through the strait have disappeared.
Reuters linked the price decline to signals from Trump that new strikes on Iran were unlikely if talks made progress. But the president’s formulation left the decision conditional on how negotiations develop and did not confirm that an agreement had been reached. Secretary of State Marco Rubio said he did not believe a diplomatic breakthrough was imminent, adding: "I’m not saying we’re on the verge of a breakthrough." The official assessment sets limits on the bet that the remarks alone pave the way for a quick settlement. Meanwhile, attacks on ships near the Strait of Hormuz continued to constrain exports of energy and other goods vital to the global economy, Reuters reported.
A Reuters report said the United States and Iran continued to launch strikes on ships in the Strait of Hormuz, constraining exports of energy and other goods. These disruptions keep supply risks in place even as Trump’s remarks lowered the likelihood of new US strikes. Analyst Sugandha Sachdeva said the market was pricing in an optimistic de-escalation scenario, but the lack of a comprehensive agreement and continued disruption to shipping could keep a geopolitical risk premium in oil prices. She estimated near-term support for Brent crude at $93 a barrel. That level appeared in a short-term forecast published on November 9, and was not a price recorded in a previous session.
Against the backdrop of the diplomatic track, a senior Iranian official told Reuters that Tehran had submitted a nuclear proposal to Washington through Qatar and that the United States was reviewing it. The official linked continued discussions to Washington first meeting seven Iranian demands. In a separate report, the Associated Press said Iran was reviewing proposals submitted by Qatar to address differences with the United States over Iran’s nuclear program. The agency quoted an official as saying Tehran was not then ready to negotiate before Washington agreed to basic conditions for a ceasefire. The remarks show that the proposed track combines the nuclear file with conditions for ending the fighting, while none establishes that an agreement is near.
Trump was scheduled to meet Qatar’s prime minister at the White House on Monday, according to the White House schedule cited by Reuters. The meeting comes as part of mediation efforts between Washington and Tehran, while Iranian sources said the nuclear proposal was under review and linked continued discussions to meeting Tehran’s demands. The report did not specify the meeting’s outcome or a date for an agreement. As for prices recorded in the previous session, EL7 data showed Brent closed at $98.32 a barrel on November 6, and West Texas Intermediate closed at $90.83. These are closing prices for that date and do not represent Monday’s session prices.