Oil retreats as traders reassess conflict risks
Brent crude briefly fell below $90 a barrel on Tuesday, November 10, as investors responded to U.S. President Donald Trump's comments suggesting that Washington's nearly nine-month war with Iran could be nearing an end. According to CNBC, it was the international benchmark's first move below that threshold since August.
At 5:33 a.m. ET, Brent was down 2.65% at $90.14 a barrel, after contracts expiring in January had traded below $90 earlier in the morning. U.S. West Texas Intermediate crude declined 2.4% to $84.78. Brent, which serves as a pricing reference for about 80% of global crude, remained well above its roughly $60 level at the beginning of the year despite Tuesday's decline.
Recovering crude flows do not erase fuel pressures
Oil shipments through the Strait of Hormuz have largely recovered, easing some concerns about supplies from the Gulf. ING strategists Ewa Manthey and Warren Patterson said in a Tuesday note that improving regional flows were adding to downward pressure on crude. They also cited reports that Iran might be becoming more flexible over control of the strait, reducing fears of a lasting disruption to a major oil transit route.
The recovery follows a year of sharp swings. Brent reached as much as $130 a barrel as military attacks intensified in March and April, eased in June and July, then returned toward those highs as the conflict appeared increasingly entrenched. Consumers have continued to face pressure from energy-market volatility. CNBC reported that the Iran conflict, Houthi attacks on Saudi Arabia and the Russia-Ukraine war have compounded shortages of refining capacity, driving up diesel, gasoline and jet fuel prices.
Trump signals progress while describing continued restrictions
Speaking at the White House on Monday after meeting Qatar's prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, Trump said he expected the conflict to end relatively soon and described Iran's communications with Washington as polite. He also asserted that Iran was effectively finished militarily. Those comments supported market hopes of de-escalation, but CNBC's report did not describe a completed agreement.
Separately, Trump wrote on Truth Social that Qatar, Saudi Arabia, the United Arab Emirates, Bahrain and Kuwait favored keeping the existing arrangements. As he described them, those arrangements would retain a naval blockade of Iran and stop the country from using land routes to move advanced weapons and other materials. His account of the Gulf states' preferences therefore pointed to continued restrictions on Iran even as he spoke of bringing the war to an end.
Election setbacks complicate the military outlook
Trump and Vice President JD Vance have acknowledged that opposition to the Iran war and elevated energy prices contributed to Republicans' heavy losses in the U.S. midterm elections the previous week. Analysts were divided over how the administration would respond to Democrats' decisive victories. Some considered renewed escalation a significant possibility, despite an initial market reaction that favored the prospect of a deal.
Washington had largely refrained from military strikes since September, and Trump said in early October that attacks would not resume before the midterms. Nevertheless, the United States subsequently carried out attacks Trump characterized as minor, following reports that two missiles had hit Qeshm Island near the Strait of Hormuz off Iran's southern coast. Officials on both sides have continued exchanging hostile statements, particularly over control of the waterway.
Analysts split over whether a deal is achievable
ING's Manthey and Patterson interpreted the selloff as a reduction in the geopolitical risk premium built into oil prices in recent weeks. More Gulf supply and expectations of easing tensions were supporting that adjustment, they said. However, they cautioned that negotiations remained uncertain and infrastructure risks persisted, leaving prices vulnerable to further Middle East developments.
FGE chairman Fereidun Fesharaki offered a more skeptical assessment on CNBC's Squawk Box Asia on Tuesday. He said the differences between Washington and Tehran remained too large to bridge, citing U.S. demands to remove enriched nuclear material from Iran and his view that Tehran would not accept a return to prewar freedom of oil passage through Hormuz. In his assessment, Trump faced a choice between declaring victory and withdrawing or returning to war.
Fesharaki also argued that Trump and Israeli Prime Minister Benjamin Netanyahu had only a two-week window from Tuesday for renewed war, a judgment rather than an announced military timetable. Israel's political transition adds another uncertainty: Netanyahu's party failed to secure a majority in last month's election, and rival Gadi Eisenkot, a former chief of the Israel Defense Forces, was formally assigned on Sunday to form a government.
Source: CNBC