Oil prices fell on Friday after US President Donald Trump ruled out fresh attacks on Iran before the November 3 midterm elections, easing immediate fears of further military escalation. However, continued disruption to shipping through the Strait of Hormuz remained a threat to global oil supplies.
Brent crude fell 0.7 per cent to $103.53 a barrel in early trading before slipping to $103.25 in Singapore. US West Texas Intermediate (WTI) crude declined 0.6 per cent to $90.97.
The drop followed a sharp rally on Thursday, when Brent rose $4.08, or 4.1 per cent, to settle at $104.28 a barrel, while WTI gained 3.6 per cent to $91.49 after reaching an intraday high of $105.88. Despite Friday’s decline, Brent remained on course for a weekly gain.
Trump said in a Truth Social post on October 8 that Washington was holding “productive discussions” with Tehran and would not attack Iran before the midterm elections. He added that the US naval blockade would “remain in full force” and claimed that 22 million barrels of oil had passed through the Strait of Hormuz the previous night.
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The announcement followed reports that the administration was considering renewed military action before the elections. However, Trump’s decision does not amount to a ceasefire or guarantee an end to the conflict, which began with US and Israeli strikes on Iran on February 28.
Diplomatic efforts remain uncertain. Iran’s Tasnim news agency reported that Foreign Minister Abbas Araqchi said Tehran was reviewing Washington’s response to a proposal to reopen the Strait of Hormuz within seven days. Disagreements over uranium enrichment and Iran’s nuclear stockpile continue to complicate negotiations.
Washington is also maintaining economic pressure on Tehran. On October 8, the US Treasury announced sanctions targeting 17 vessels and associated individuals and networks accused of facilitating the transport of Iranian crude oil, petroleum products and petrochemicals.
The security of the Strait of Hormuz remains central to the oil market outlook. Before the conflict, the strategic waterway handled about one-fifth of global oil and fuel shipments.
Kpler data cited in market reports showed crude flows through the strait reached 10.1 million barrels per day on October 6, down 27 per cent from the previous week and equivalent to about 74 per cent of pre-war levels. Only seven commodity-carrying vessels transited the waterway that day, the lowest daily total since July 23.
Maritime security risks have also increased. Figures attributed to maritime security sources showed at least 12 attacks on oil, liquefied natural gas and liquefied petroleum gas tankers between September 28 and October 5, the highest weekly total since the war began. The incidents, alongside reports of drone activity and radio warnings, have raised concerns about the safety of commercial shipping.
Elsewhere, China was preparing to resume refined fuel exports after a brief holiday-related suspension, potentially easing supplies of diesel, petrol and jet fuel, Reuters reported on Friday.
However, Hurricane Isaias disrupted production in the US Gulf of Mexico, with about 1.3 million barrels per day shut in as of Thursday, according to industry figures cited in the report.
For Nigeria and other fuel-importing economies, lower crude prices could reduce import costs. However, any relief may be offset by high freight charges, war-risk insurance premiums and shipping delays. Estimated insurance costs of between $0.80 and $1.20 per barrel could add to the cost of delivering petroleum products.
Higher petrol and diesel prices have also become a concern for American households ahead of the midterm elections, in which Republicans are seeking to retain their narrow congressional majorities. Trump’s pledge to avoid attacks before the vote signals a pause in immediate military escalation, but leaves open the possibility of further action if negotiations fail.
A sustained fall in oil prices will depend on progress in negotiations, safer passage through the Strait of Hormuz and a reliable recovery in regional exports.
