Brent crude falls below $90 a barrel for first time since August

The oil market has seen a dramatic turnaround this month, with prices tumbling from the six-month high reached at the end of October.

Brent crude slumped below $90 a barrel for the first time since August, deepening a selloff as traders boosted bets on a resolution to the Middle East war.

The global benchmark sank as much as 3.1% on Tuesday after sliding almost 6% the day before. (Representative Image/Bloomberg)

The global benchmark sank as much as 3.1% on Tuesday after sliding almost 6% the day before. US President Donald Trump, facing pressure to end the conflict following Republicans’ defeat in US midterm elections, said further strikes on Iran wouldn’t be necessary.

The oil market has seen a dramatic turnaround this month, with prices tumbling from the six-month high reached at the end of October. US gasoline also slid below $4 a gallon for the first time since July, easing some of the pressure on central bankers grappling with elevated inflation even as costs remain high.

“The market is betting Trump won’t resume strikes after the midterm blue wave,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “Crude could fall further, but I think the biggest move is behind us.”

Congressional Democrats are now weighing whether to use a Dec. 11 government shutdown deadline to pressure Trump into ending the conflict, now in its ninth month, as pressure builds on the administration to find an off-ramp.

The president said the US remains “locked and loaded,” while signaling he’s looking to wind down the war after the midterm results underscored its unpopularity. “Iran, militarily, is effectively over,” he told reporters on Monday after meeting Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani at the White House. Qatar is a mediator in talks between the US and Iran.

It’s not yet clear whether the softer rhetoric will translate into tangible progress toward ending the war started by the US and Israel, with political uncertainty deepening after Prime Minister Benjamin Netanyahu lost his parliamentary majority last month.

Negotiations will continue and there likely won’t be any military escalation while they do, an official familiar with the matter said. In the meeting with the Qatari prime minister, the US signaled that maintaining the status quo of diplomacy and applying economic pressure on Iran was the best way to resolve the conflict, the person said.

During months of stop-start talks, Tehran has insisted that the US end its naval blockade of the country’s ports and lift sanctions, while Washington has pressed Iran to stop attacking vessels in the Strait of Hormuz and make concessions over its nuclear program.

Despite strikes on ships, oil continues to exit the region. A wave of Hormuz crossings over the past couple of months has taken overall oil shipments from the Middle East close to prewar levels, and Saudi shipping firm Bahri said Tuesday it’s sending some tankers through the waterway in coordination with the US military.

Meanwhile, risks to energy infrastructure in the region persist. Saudi Arabia’s key East-West pipeline was targeted Monday in the Medina region, causing a limited fire that was extinguished, the state-run Saudi Press Agency reported.

Geopolitical risks elsewhere also remain in focus. Ukraine continues to strike Russian refineries, while Moscow is repeatedly targeting energy and civilian infrastructure in its neighbor. US-mediated talks between the sides are underway in Abu Dhabi, and the presence of higher-level diplomats than in previous rounds has been seen as a sign of greater openness to substantive negotiations after months of stalemate.

Traders this week will also be watching monthly market reports from all three major forecasting agencies: the US Energy Information Administration later on Tuesday, OPEC on Wednesday and the International Energy Agency on Friday.