Brent Crashes as Trump Signals Restraint on Iran

By Adedapo Adesanya

Brent crude dropped $5.75 or 5.85 per cent, on Monday to trade at $92.57 per barrel, its lowest since late August, after US President Donald Trump downplayed the likelihood of renewed strikes on Iran.

Also, US West Texas Intermediate (WTI) futures ‌lost $3.98 or 4.38 per cent to quote at $86.85 a barrel after Mr Trump said on Sunday he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed. Still, both countries reported that shipping had been hit in or near the Strait of Hormuz.

Last week, the American President had hinted at a ​resumption of attacks on Iran, to which the government in Tehran vowed to respond by striking US and Israeli targets. However, there has been no sign of a ⁠large-scale US military operation.

Another round of unconfirmed reports about a potential US-Iran diplomatic breakthrough sent fresh optimism rippling through oil markets on Monday.

There are renewed diplomatic efforts involving Qatar and Pakistan, with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani scheduled to meet President Trump to discuss a possible ceasefire and renewed nuclear negotiations.

However, the latest optimism contrasts sharply with comments from US Secretary of State Marco Rubio over the weekend.

He dismissed suggestions of an imminent breakthrough, saying Iran’s demands were “not just unacceptable, but in some cases outrageous and ridiculous.”

Mr Rubio acknowledged that the US remained open to diplomacy but warned that negotiations had so far produced little meaningful progress.

Meanwhile, Iraq has reached understandings with the US to allow Iraqi oil exports through the Strait of Hormuz via a shipping lane near Oman.

Yet, the Middle East tensions remain, as a fire was extinguished after Saudi ​Arabia’s East-West pipeline was struck. There were no casualties and the pipeline’s operations were not affected, according to Saudi media.

The Saudi-led coalition fighting Yemen’s Iran-aligned Houthis said on Monday it destroyed ‌a factory ⁠used by the group to make ballistic missile components and a chemical plant used for producing ballistic missile fuel, without specifying the locations of the targets.

The Houthis claimed responsibility for an attack on Sunday at Saudi oil giant Aramco’s corporate office in the heart of the financial district of the capital, Riyadh.

Elsewhere, Russia ​and Ukraine are reportedly coming to US-brokered talks to end ​Moscow’s war on Ukraine with good intentions.

Crude output from the 11-member Organisation of the Petroleum ⁠Exporting Countries ​(OPEC) rose by 1.38 million barrels per day from the previous month to 22.87 million barrels per day, buoyed by gains in Saudi Arabia, Kuwait and Iraq despite continued constraints on exports.