WTI falls 1.40% to $85.63 as fears of escalation over Iran ease

Key Facts

West Texas Intermediate fell 1.40% to $85.63 a barrel in an update published by FinanceFeeds on Tuesday, November 10, as investors reassessed the risk of military escalation between the United States and Iran. The move followed a sharp drop in the previous session, when U.S. crude settled Monday at $86.85, down $3.98. Brent settled in the same session at $92.57 a barrel, down 5.8%, according to the Associated Press. In early trading Tuesday, Brent was at $91.88 and WTI near $86.07 at 0246 GMT, according to Reuters. Trump said he would postpone launching new military strikes on Iran for now, a signal that eased market fears of a widening confrontation.

Reuters linked the oil decline to Trump's less escalatory tone, and market analyst Tim Waterer said the market was prioritizing the president's more conciliatory tone toward Iran since the midterm elections. Trump's remarks followed appeals from countries in the region, including Qatar, to postpone new strikes. After meeting Qatar's prime minister, he also said the war was effectively over from a military standpoint and that there was a "good chance" of ending it. The Associated Press reported that Qatari officials had presented proposals on Iran's nuclear program the previous week. Trump signaled that indirect talks with Tehran were continuing, but his remarks included no announcement of an agreement.

Trump, by contrast, said he intended to keep the naval blockade in the Strait of Hormuz in place for now, while Reuters noted that shipping risks remained elevated. The agency quoted Gregory Brew, an analyst at the Eurasia Group, as saying Iran continued to attack ships transiting the strait. Brew said Brent prices might not fall below $90 a barrel without more sustained signs of de-escalation and a U.S.-Iran agreement. That puts diplomatic moves alongside continued risks to navigation through the strait, a key route for oil flows. A shift in political tone alone therefore remains insufficient to determine the impact of developments on supply.

Brent had fallen from more than $112 a barrel at the start of the month, according to the Associated Press, amid uncertainty over the outcome of the war with Iran. The agency reported that prices continued to decline after Trump said a resumption of strikes was unlikely if progress was made in negotiations. Against the backdrop of the broader decline, Reuters said Brent had fallen about 22% from a six-month peak of $118 a barrel, recorded on October 30, as fears of increased attacks eased after the U.S. midterm elections. By contrast, the U.S. Energy Information Administration forecast in October that oil flows from the Middle East would remain constrained during the fourth quarter of 2026. The agency said it expected flows to increase overall during its forecast period as convoys passed through the strait and alternative export routes were used.

Attention next turns to the Energy Information Administration's weekly U.S. oil inventory report, due Thursday, November 12 at 12 p.m. Eastern time, after its release was rescheduled because of Wednesday's holiday. The report covers the week ended November 6 and could add another indicator for the market's monitoring of U.S. supply and demand. In its October forecasts, the agency raised its estimate for the average spot price of Brent in the fourth quarter to $105 a barrel, up $14 from the previous month's forecast. It also forecast an average of $84 a barrel in 2027. These estimates remain tied to expectations for Middle East flows and developments in shipping and escalation, while traders monitor inventory data and developments in the Strait of Hormuz.