Oil Drops on Peace Talk Hopes, US Midterm Election Outlook

By Adedapo Adesanya

Oil eased by about 1 per cent on Tuesday as the market weighed talks to end the wars in Ukraine and Iran against worries that recent attacks in both ‌conflicts could further disrupt supplies.

Brent futures fell $1.17 or 1 per cent to $103.60 a barrel, while US West Texas Intermediate (WTI) ​crude depreciated by 37 cents to settle at $96.09 per barrel.

Although Iran and the US are still far from a deal to end their war, Qatar, acting as the mediator, stepped up efforts to avert an escalation after the US midterm elections.

Qatar’s ⁠Foreign Ministry spokesperson said the US and Iran remain committed to mediation efforts and are reviewing proposals aimed at bridging their differences.

The world is also watching US midterm elections to see whether President Donald Trump’s Republican Party can retain control of the US Congress for the rest of his second term.

Early results monitored by Business Post show that Democrats have won the House of Representatives, while the Senate may also flip to their advantage.

In the Middle East, there has been a major escalation in Houthi attacks on Saudi Arabia. Drones and missiles have been launched on Saudi territory almost daily since September, with reports saying that Houthi militants are actually conducting ground force incursions.

Saudi state oil company Aramco is working to expand a crude pipeline that circumvents the Strait of Hormuz, according to its chief executive, Mr Amin Nasser.

The effective blockade of the ​chokepoint that links the Gulf to world markets, where 20 per cent of global oil supplies formerly flowed, has redrawn energy flows and infrastructure investment priorities among the region’s oil producers.

Also, Russia ⁠will hold three-way peace talks with Ukraine and the US in Abu Dhabi from November 10 to 11, the Kremlin confirmed. Despite this, both sides continue to attack, with Russia bombarding Ukraine’s ​energy infrastructure, knocking out power, while Ukraine set fire to a major oil refinery in the Russian city of Yaroslavl in an overnight drone attack.

The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 5.267 million barrels in the week ending October 30. In the week prior, US crude oil inventories fell by a staggering 2.031 million barrels.

Commercial crude oil inventories excluding the SPR have lost more than 64 million barrels over the last 29 weeks, and 12 million over this year, according to API data.