News that US President Donald Trump intends to give more time to diplomatic efforts before deciding on the restoration of attacks against Iran after the midterm elections has led to a drop in oil prices.
elchi reports that the price of a barrel of Brent crude has fallen by more than 3 percent to $109. On Friday, the price of Brent had risen to $118. A barrel of Light crude is trading at $100.
According to experts, the decline in oil prices is influenced by news that Donald Trump prefers diplomatic initiatives with Iran. Trump’s preference for a diplomatic solution strengthens expectations that tensions in the Middle East may decrease and risks associated with oil supply from the region may weaken. This factor exerts downward pressure on oil prices. Expectations that diplomatic contacts may resume reduce concerns about the potential impact of conflicts in the Middle East on oil transportation, supporting the decline in prices.
On the other hand, the decision by OPEC+ countries not to increase production further in December limits the further decline in prices. Seven members of the OPEC+ group agreed at yesterday’s meeting to maintain the production levels set for September in December as well.
According to the decision, Saudi Arabia’s crude oil production target per day in October will be 10 million 478 thousand barrels, Russia’s 9 million 949 thousand barrels, Iraq’s 4 million 431 thousand barrels, Kuwait’s 2 million 676 thousand barrels, Kazakhstan’s 1 million 628 thousand barrels, Algeria’s 1 million 7 thousand barrels, and Oman’s 841 thousand barrels. It was stated that member countries will continue monthly meetings to assess market conditions. The next meeting of the group is scheduled for November 29.
The price of Brent crude rose in October, reaching its highest level in the last 6 months, despite the resumption of crude oil transportation through the Strait of Hormuz.
Analysts consider the recent decline in oil prices to be a temporary setback. It is noted that the current statements keep the possibility of further escalation of tensions in the Middle East on the agenda, which could lead to an increase in oil prices in the future.