Oil Falls 13.2% in a Week, Its Biggest Loss Since 2022 as War Premium Eases

Key Facts

Front-month oil futures fell 13.2% in the week ended November 6, their biggest weekly loss since 2022, according to a Bloomberg report published via Rigzone. The decline came as the war-related risk premium eased, after the report said Washington and Tehran were nearing a breakthrough in efforts to end the conflict. It said Tehran had shown flexibility on aspects of its nuclear program that had previously been ruled out. “What is happening looks like a partial unwinding of the war premium,” an analyst at Price Futures Group said. The two contracts edged higher in Friday’s session, but that did not change the sharp weekly loss.

The January Brent contract settled at $98.32 a barrel in New York on Friday, up 0.03% for the session, while the December West Texas Intermediate contract rose 0.3% to $90.83. EL7 daily closing data show the week’s decline and recovery: Brent closed at $104.77 on November 2, then $103.6 on November 3, before falling to $94.62 on November 4. It recovered to $98.29 on November 5 and then $98.32 on November 6. WTI closed at $96.46 on November 2 and $96.09 on November 3, then fell to $88.12 on November 4. It recovered to $90.52 on November 5, then ended Friday at $90.83.

Alongside the diplomatic track, a rebound in Gulf crude exports also weighed on prices. A Bloomberg report said Saudi Arabia and the UAE had restored crude shipments to pre-war levels, expanding the supply available in the market. But exports of oil products from the Gulf remained more constrained, limiting the extent to which the recovery could be considered broad across all types of shipments. Attacks on vessels transiting the Strait of Hormuz also continued, keeping supply risks in place despite improved crude flows. Signals of rising supply and continuing threats to maritime transport thus combined to shape the oil market picture during the week.

Bloomberg also linked the shift in market expectations to losses by President Donald Trump’s party in the midterm elections, and ensuing expectations that the administration would seek to end the conflict more quickly. In a Reuters report published during Friday’s session, Brent was then heading for a weekly loss of 17%, while WTI was on course for a 13% decline. The report presented those figures as estimates during trading, while the Bloomberg report published at the close put the weekly loss for front-month contracts at about 13.2%. The closing result was therefore below Reuters’ interim estimate for Brent, while the week remained the weakest since 2022, according to Bloomberg. The difference between the two figures reflects the timing of the measurements during the session, not a change in the fact that oil suffered a large weekly loss.

The move comes as the International Energy Agency expects global oil demand to fall by an average of 2.6 million barrels a day in 2026. In its October report, the agency forecast supply would decline by an annual average of 5.8 million barrels a day during the year, before rising by 7.7 million barrels a day in 2027. It described the supply recovery as fragile amid renewed attacks in the Gulf. On the production side, the seven countries participating in the OPEC+ agreement decided to keep December output at the levels required for September. Those countries set November 29 for their next meeting to review market conditions.

Markets are awaiting energy updates in the coming days, with the U.S. Energy Information Administration set to release its Short-Term Energy Outlook on November 10. The International Energy Agency is scheduled to release its monthly oil market report on November 13, including historical data and forecasts for supply and demand next year. Separately from the talks concerning Iran, the Kremlin spokesman said a new round of trilateral talks between Russia, Ukraine and the United States was scheduled soon in Abu Dhabi on Tuesday and Wednesday. Those talks involve the three parties and are unrelated to the Washington-Tehran efforts associated with the price decline. The energy reports and the next OPEC+ meeting will provide checkpoints for developments in supply and demand after a week of losses.