Oil steadies as Trump plays down fresh Iran strikes — but Hormuz attacks continue
Brent held near $98 and WTI near $91 on Monday morning after President Trump said he was highly unlikely to order fresh attacks on Iran while talks progress — but attacks in the region kept coming, and the market's own numbers point to oversupply.
The News
Oil was steady in Monday morning trading after President Donald Trump said on Sunday he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progress. Brent inched up 3 cents to $98.35 a barrel by 0427 GMT, and WTI — the main US benchmark — rose 0.5% to $91.30. The calm follows a brutal week: Brent fell 16% last week, its steepest weekly drop since the start of COVID, as traders priced in hopes of de-escalation after the US midterms.
The restraint talk sits alongside fresh incidents. The Iran-aligned Houthis claimed responsibility for an attack on Saudi Aramco's offices in Riyadh on Sunday that left windows blown out but no reported casualties. US forces disabled the cargo ship M/V Huda in the Gulf of Oman on Saturday, November 7, after its crew ignored repeated warnings and tried multiple times to breach the naval blockade of Iran — the fifth merchant vessel the US says it has disabled since its blockade enforcement escalated in July, according to US Central Command. Separately on Sunday, the UAE rescued all 22 crew from a different cargo ship that caught fire in the Gulf of Oman. The two incidents are separate: the second vessel was not named, no cause was given, and no verified link exists between them. Trump had hinted at renewing attacks after the midterms, but there has been no sign of a large-scale US operation, and Iran says it would respond by striking US and Israeli targets.
The market's own numbers point the other way from the risk premium. JPMorgan said in a Friday report that recovering Middle Eastern flows, rising production elsewhere and weak demand have pushed global supply above consumption — a surplus of 1.1 million barrels a day in September, widening to 1.4 million barrels a day in October. Prices moved during the session: later on Monday, Brent slipped to about $97, down roughly 1.3%, according to Dow Jones via TradingView. The Reuters morning snapshot is the anchor for this story, and the slide shows how quickly the mood can turn. Previous closes were Brent $98.32 and WTI $90.83 on Friday, November 6.
Brent fell 16% last week — its steepest weekly drop since the start of COVID.
Why It Matters
Oil prices are set by two things at once: how much oil the world produces and uses, and how scared traders are that supply will be cut off. The Strait of Hormuz is the chokepoint that makes the fear real — a large share of the world's seaborne oil passes through it, so any attack nearby adds a risk premium, an extra amount traders will pay for oil because they fear a disruption. When the fear fades, as it did after the midterms, that premium comes out fast — which is how Brent lost 16% in a week.
The fundamentals, though, are pointing down. A surplus means the world is producing more oil than it is using — 1.4 million barrels a day more in October, according to JPMorgan — and surpluses usually push prices lower unless something interrupts supply. That is the tension in this market: the numbers say cheaper oil, while the headlines say the risk has not gone away. The Monday session captured it in miniature, with the morning calm giving way to a slide toward $97.
Analyst's Take
Our call is Mixed. The two forces pushing oil are pulling in opposite directions, and neither has won yet. On one side, the risk of a wider war has not gone away: ships are still being hit near the Strait of Hormuz, the Houthis are still striking Saudi targets, and Iran has said it would hit back at US and Israeli targets if attacked again. On the other side, the market is awash in oil — JPMorgan's surplus of 1.4 million barrels a day in October is a big number, and weak demand is doing nothing to soak it up.
What to watch: whether the talks Trump pointed to actually progress or break down, and whether the incidents near Hormuz escalate into something that closes or disrupts shipping. The data calendar matters too: US inflation figures on Tuesday, the EIA's outlook on November 10 and OPEC's monthly report on November 11 will each test whether the surplus story or the war story sets the price. For Exxon, Chevron and Shell, the near term is a tug of war between a falling oil price and a risk premium that refuses to disappear.
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By The Numbers
FAQ
What did Trump actually say?
On Sunday he said he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progress. He had hinted at renewing attacks after the US midterms, but there has been no sign of a large-scale US operation since.
Why did oil fall 16% last week?
Traders priced in hopes that the conflict would de-escalate after the US midterms. Reuters calls it Brent's steepest weekly drop since the start of COVID — a war premium built up over weeks of tension came out of the price in days.
What happened in the Strait of Hormuz over the weekend?
Two separate incidents. US forces disabled the cargo ship M/V Huda in the Gulf of Oman on Saturday, November 7, after it tried to breach the naval blockade of Iran — the first vessel disabled since October 10. Separately on Sunday, the UAE rescued all 22 crew from a different cargo ship that caught fire in the Gulf of Oman. The vessel was not named, no cause was given, and there is no verified link between the two incidents.
What is the oil market's supply picture?
JPMorgan said in a Friday report that recovering Middle Eastern flows, rising production elsewhere and weak demand have pushed global supply above consumption — a surplus of 1.1 million barrels a day in September, widening to 1.4 million barrels a day in October. More supply than demand usually pushes prices down.
What should I watch next?
US inflation data on Tuesday, the US Energy Information Administration's Short-Term Energy Outlook on November 10, and OPEC's monthly report on Wednesday, November 11.
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Source: Reuters