Brent Falls 1.2% to $91.49 as Iran Escalation Fears Ease
Key Facts
Brent crude settled Tuesday, November 10, at $91.49 a barrel, down $1.08, or 1.2%, as fears of an escalation in the confrontation between the United States and Iran eased. Reuters said the two benchmarks ended the session at their lowest levels since August 31 for a second consecutive day. The decline came after U.S. officials softened their talk of the need for further military action, amid waning concern about supply disruptions. Brent had fallen by more than $3 a barrel in early trading. But it recovered some of its losses after Iranian security official Mohsen Rezaei said no negotiations were currently taking place between Tehran and Washington.
West Texas Intermediate settled at $86.04 a barrel, down 81 cents, or 0.9%, Reuters reported. The U.S. crude benchmark therefore fell by less than Brent in percentage terms during the session, while both benchmarks closed at their lowest levels since the end of August for a second consecutive day. Reuters added that both contracts remained in technically oversold territory. EL7 data showed Brent settling at $92.57 and WTI at $86.85 on November 9. Prices then closed in the following session at $91.49 and $86.04, respectively.
U.S. Secretary of State Marco Rubio attributed Washington’s position to the effectiveness of sanctions and the naval blockade. He said he had told the Group of Seven that “U.S. economic sanctions and the naval blockade are working,” adding that President Donald Trump did not need to carry out major combat operations against Iran. This coincided with Trump’s comments that the war could end “fairly soon,” according to open coverage. In an assessment of the market’s moves, Tim Waterer, an analyst at KCM Trade, said investors were still prioritizing Trump’s more conciliatory tone toward Iran since the midterm elections. These remarks help explain some of the decline in the risk premium, while Tehran’s denial of negotiations brought some caution back to trading.
Tuesday’s session followed a 5.85% decline in Brent in the previous session, Reuters reported. Despite the drop, estimates from the U.S. Energy Information Administration showed that spot Brent averaged $124 a barrel in October, up $10 from September. That was the highest average since July 2022 after adjusting for inflation. The administration estimated that Middle East oil production shut-ins averaged 2.5 million barrels a day in October, compared with a peak of 10.9 million barrels a day in May. These figures show that the volume of shut-in production declined as prices fell in recent sessions.
On the demand side, the Energy Information Administration forecast global oil consumption would fall from a record 104.4 million barrels a day in 2025 to 102.4 million barrels a day in 2026. It also reported that U.S. commercial crude inventories fell to 410 million barrels at the end of October, the lowest end-of-month level since 2014. These factors offer mixed signals to the market: low U.S. inventories and shut-in regional production on one hand, and expectations of weaker global consumption than the previous year’s level on the other. In its latest outlook, the administration said it expected Brent to average near $100 a barrel in November and December. It assumed that most Middle East production, excluding Iran, would return to its pre-conflict averages by mid-2027.
The Energy Information Administration expects the spot price of Brent to gradually decline to an average of $77 a barrel in the fourth quarter of 2027, as global inventories grow over the next year. In the nearer term, Reuters reported that U.S. consumer prices rose more than expected in October. Investors said this increased the likelihood that the Federal Reserve would raise interest rates by half a percentage point at its December meeting. Interest-rate expectations add another factor to monitor in oil markets, alongside political developments and supply. Both crude contracts remained in technically oversold territory at Tuesday’s close, Reuters reported.