Oil Settles Lower After Volatile Session as Brent Holds Near $109

what happened

Oil futures finished Tuesday lower after a choppy session in which prices briefly touched multimonth highs. December Brent dropped 0.7% to $108.79 a barrel, while December WTI settled at $97.82, down 0.7%, Dow Jones Newswires reported. Traders weighed prospects for US-Iran diplomacy against ongoing supply risks in the Middle East.

Mizuho Securities USA said there was no clear headline behind the decline. Deutsche Bank analysts think a US-Iran deal before the midterm elections in two weeks looks increasingly unlikely, and Barclays called a return to prewar supply and spare capacity in the region a remote possibility. ING said the geopolitical risk premium remains significant, while record tanker freight rates add to transport costs.

The risks are broader than the Strait of Hormuz. Reports described attacks on tankers off Saudi Arabia and on a tugboat near the UAE, and a Saudi-led coalition said it destroyed a ballistic missile fired by the Houthis toward Riyadh.

why it matters

For markets, the key question is how fast flows through the Strait of Hormuz can recover. While the risk premium keeps prices elevated, the expiry of the November WTI contract added volatility in a thin market. Oil direction will likely hinge on talks and on the safety of shipping routes.

market impact

Oil: Middle East supply risks keep Brent and WTI supported, while progress in talks could push prices lower

tags

instruments