WEB DESK: Oil prices declined for a fourth consecutive session on Thursday, as investors considered whether Republicans’ losses in US congressional elections could make further escalation of the Iran conflict less likely.
Brent crude was down 97 cents, or 1.03%, at $93.65 a barrel by 0211 GMT. US West Texas Intermediate fell $1.14, or 1.29%, to $86.98.
Sources close to Gulf government circles said a politically weakened President Donald Trump may have more reason to pursue an agreement with Iran, while a Democratic-controlled Congress could limit his military options. They said a large-scale assault on Iran now appeared less likely.
Any easing of the conflict could help restore Middle Eastern oil supplies. But analysts warned that the prospects for a settlement remain uncertain. Markets are increasingly pricing in the possibility that the war could end, said June Goh, senior oil analyst at Sparta Commodities, though she cautioned that the route to diplomacy remains unclear and global strategic reserves have been substantially depleted.
Oil flows through the Strait of Hormuz, a vital route for Gulf exports, have reportedly recovered close to pre-war levels, albeit at higher cost. JPMorgan said the return of supply has shifted the global market back into surplus after months of disruption. The bank estimated the surplus at 1.1 million barrels per day in September and 1.4 million bpd in October, close to last year’s average of 1.3 million bpd.
The price decline may not last, however. Mukesh Sahdev, chief executive of energy consultancy XAnalysts, said geopolitical uncertainty still makes the outlook difficult to call. He also noted that the new Congress will not take office until January, so the election results have not immediately changed US policy options.
Sahdev added that commercial oil stocks in major consuming nations are near a 15-year low, and that Iran may emerge from the election with greater resolve. Meanwhile, US crude, gasoline and distillate inventories all fell last week as demand reached its highest level in a year, according to the Energy Information Administration.
