🚩 Oil extends losses

Brent crude oil futures (OIL) are down almost 2.5% today and are trading at their lowest levels since September 7. Saudi Aramco has resumed loading tankers at the Red Sea port of Yanbu, partly easing concerns about supply disruptions. The pipeline had previously been shut after drone strikes, so its reopening has been interpreted by the market as a factor reducing supply-side pressure.

• According to Kpler data, September crude exports from the Gulf region recovered to around 80% of pre-war levels, pointing to a gradual improvement in the supply situation.
• Another factor improving crude availability is Saudi Arabia’s resumption of exports via the East-West pipeline after damage from drone strikes was repaired. The route allows oil shipments to bypass the Strait of Hormuz.
• The market is still concerned that, given the tense geopolitical backdrop, the current level of exports may prove difficult to sustain.
• Oil prices remain volatile, as the lack of progress in U.S.-Iran talks at times appears to outweigh the positive signals coming from recovering exports.
• The still relatively strong backwardation, with near-dated contracts trading above longer-dated ones, continues to point to tight conditions in the physical oil market.
• Some reports also point to the possibility of restrictions on U.S. diesel exports, while Russia is reportedly considering extending its diesel export ban for producers by another month.

Although Donald Trump denied that he had offered Iran any concessions, oil prices continue to fall. For markets, the key point is that despite the diplomatic deadlock, oil flows through the Strait of Hormuz appear to be stabilizing even as relations with Tehran remain tense. This may make investors increasingly willing to push geopolitical risk into the background, at least as long as Iran or the Houthis do not resume large-scale attacks on critical infrastructure.

OIL Chart (D1 Interval)

Long-term forecasts differ significantly across major agencies, making it difficult to form precise expectations for oil prices over the coming years or decades.

Source: The Conversation