Oil falls after Trump says no attacks on Iran
World oil prices began to fall on Friday, October 9, after U.S. President Donald Trump said there would be no new attacks on Iran before the midterm elections on November 3. The market reversed after a significant rise the day before, when fears of military escalation pushed prices to multi-month highs.
During Friday trading, December Brent crude futures fell 1.3% to $102.90 a barrel, The Wall Street Journal reports. December West Texas Intermediate (WTI) contracts lost 1.4% and traded near $89.50.
As of 12:39, Brent is trading at $103.11, WTI at $90.7.
The day before, Brent rose more than 4% and closed at $104.28 a barrel. On Thursday, prices rose above $105 amid reports of possible U.S. strikes on Iran and new attacks on ships in the Strait of Hormuz.
The situation changed after Trump said on his social network Truth Social that Washington was in "productive talks" with Tehran and was not planning new military operations against Iran until the U.S. midterm elections.
At the same time, the U.S. president stressed that the naval blockade of Iranian ports would remain in force. He also claimed record volumes of oil transported through the Strait of Hormuz, though his figures have not been independently verified.
According to Bloomberg, Trump's decision to temporarily refrain from new strikes reduced fears of an immediate escalation of the conflict, but did not remove risks to energy supplies from the Middle East.
In recent days, Iran has intensified attacks on commercial ships in the Strait of Hormuz. This route carries a significant portion of the world's maritime oil and liquefied natural gas traffic. Although shipment volumes are gradually recovering, the threat of new attacks continues to affect shipping and insurance costs.
Additional instability is caused by the resumption of hostilities between Saudi Arabia and Iran-backed Houthis in Yemen. This week, Houthis attacked two Saudi Arabian airports, raising fears that the conflict could spread to other countries in the region.
Oil prices also came under pressure from the expected resumption of fuel exports from China after the holiday week. According to The Guardian, the return of Chinese suppliers to the international market may partially ease the shortage of diesel, gasoline, and jet fuel.
However, further declines in oil prices are being hampered by the situation in the United States. As Hurricane Isaias approaches, oil companies have temporarily shut down about 1.3 million barrels per day of production in the Gulf of Mexico. That is more than 60% of oil production in the region.
Thus, despite the price drop after Trump's statement, the oil market remains under the influence of opposing factors: the resumption of supplies from the Middle East and China is restraining prices, while attacks on ships, the threat of new military escalation, and reduced U.S. production support risks of supply disruptions.
Sources: Bloomberg, The Wall Street Journal, The Guardia
