| Commoditiy | Price | Weekly Change | 50day-Ave | 100day-Ave | 200day-Ave |
|---|---|---|---|---|---|
| Brent ($/b) | 96.56 | -8.21 | 104.48 | 94.49 | 93.85 |
| US WTI ($/b) | 89.77 | -6.69 | 95.59 | 87.45 | 87.56 |
| ICE Gasoil ($/MT) | 1,348.75 | -59.75 | 1,445.35 | 1,302.32 | 1,188.27 |
| Jet CIF NWE ($/MT) | 1,348.39 | -78.16 | 1,492.78 | 1,339.91 | 1,279.96 |
The oil market experienced a significant correction last week. Prices started falling on Monday after news that the Iranian supreme leader had authorised talks. The move accelerated on Tuesday after rumours began circulating that a deal between Iran and the US had been reached or some significant progress had been made. Brent set a low of close to 100 \$/b afterwards, but recovered somewhat when Iran insisted that US proposals were unsatisfactory.
The sell-off gathered pace on Wednesday morning after the US mid-term elections showed Trump had lost both houses and Brent fell close to 93 \$/b in the afternoon when both Trump and JD Vance conceded that they war had cost them the election. This means that Brent has gone from 118 \$/b at the end of October before the contract for December delivery expired at its highest level since April to a low of close 93 – a fall of around 25 \$/b. The market did rally into the end of the week as it became clear that the market was getting a bit ahead of itself in factoring in an early end to the conflict and is trading around 96 \$/b this morning
The enthusiasm of the sell-off was tempered by the complexities of ending the war soon. Iran’s position remains that its price for a reopening of the Strait of Hormuz includes: reparations, unfreezing of assets and retaining control of the Strait. For the US, control of foreign policy and defence remains with Trump. Is he really likely to agree to Iranian demands now, on top of the embarrassment of the election result. While his uncharacteristically contrite comments on Wednesday acknowledged the war was unpopular, he was still unrepentant about it and while the Democrats have talked of bringing the war to an end, they lack a direct lever to end it, even once the change in makeup of the house actually takes effect in Janurary.
The attacks on vessels in the Strait of Hormuz have continued and over the weekend there have been US strikes on Iran’s Qeshm Island. An Iraqi gas field was forced to stop producing after it was struck by a drone and Saudi Aramco’s building in the Riyadh was hit by a Houthi strike. The US has also been putting pressure on Iraq to reduce border crossings with Iran in an attempt to further isolate the Iranian economy and Trump has announced a new task force christened Iron Gate, which aims to coordinate the disruption of supplies of advanced Iranian weaponry. So, Trump does not appear ready to throw the towel in yet.
There has been a ramping up of dialogue to end the conflict, led by Qatar and the Qatari prime minster is meeting Trump at the White House today. It is impossible to judge whether progress is being made though. Trump said an attack on Iran was unlikely if talks were progressing, but has attacked Iran.
The low in Brent last week, took it down to the 100 and 200-day moving average and there have also been falls in the premium of jet fuel and diesel over Brent – i.e. they have fallen further than Brent. The market may need to see signs of tangible progress in talks before it is able push through last week’s lows.
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