On November 2, international oil prices fell by more than 3%, as growing expectations of progress in US-Iran diplomatic negotiations eased investor concerns about a renewed escalation of Middle East conflicts and potential disruptions to crude oil supply.
As of press time, Brent crude oil futures dropped 3.14% to $109.87 per barrel, while US WTI crude oil futures fell 3.42% to $100.56 per barrel. Previously, both major crude oil futures had accumulated gains of nearly 15% in October. With no major military conflict escalation over the weekend, some investors chose to take profits.
Trump Wants More Time for Diplomatic Talks, Israel Pushes for Quick Resumption of Military Strikes
According to sources familiar with the matter, Trump said during a phone call with Israeli Prime Minister Netanyahu on October 31 that he wanted to give diplomatic negotiations more time before deciding whether to relaunch military action against Iran. Netanyahu urged the US to immediately resume military strikes on Iran after the November 3 midterm elections and expressed concern over Trump's preference for continued negotiations.
Meanwhile, Iranian and Qatari officials have held talks for a third consecutive day, attempting to push for an end to the conflict and reach arrangements for reopening the Strait of Hormuz. Iran stated it remains willing to resolve disputes through diplomatic channels but will continue to maintain military defense readiness. Currently, no specific agreement has been reached by the parties.
ING analysts believe that if no new military strikes occur and no peace agreement is reached after the US midterm elections, the market will face an important question: whether the geopolitical risk premium already priced into oil prices will gradually dissipate.
OPEC+ Keeps December Production Target Unchanged
On the supply side, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided on November 1 to keep the December crude oil production target unchanged. Against the backdrop of ongoing Middle East conflicts disrupting crude oil exports, the group does not expect to further adjust production policy in the short term.
Although progress in diplomatic negotiations has driven oil prices lower, shipping risks in the Strait of Hormuz remain unresolved. Previous attacks on oil tankers and restrictions on Iranian crude oil exports have pushed up transportation and insurance costs, and the market is still closely watching military developments after the US midterm elections.
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