Brent falls below $103: oil market caught between diplomacy and the threat of new strikes

The price of Brent crude fell on Wednesday, November 4, to $102.91 a barrel, according to Trading Economics data. A day earlier, on US election day, Brent hovered around $104.5, after losing more than seven percent in the previous trading session.

The decline follows an October in which oil prices surged. On Friday, October 30, Brent rose 2.4 percent to $117.64, briefly touching $118, while US WTI settled at $104.12. For the month, Brent gained about 15 percent and WTI about 12 percent, marking a fourth consecutive monthly gain and the highest level since April. Before the war, at the end of February, Brent cost around $72.

What is sustaining the risk premium

Ryan McDaniel, president of Duncan Oil, told Reuters that fear of new US strikes was "keeping the supply risk premium elevated despite earlier diplomatic efforts." Trump had earlier said he would not attack Iran before the elections, so investors expected possible strikes immediately after November 3.

According to an analysis by Oil & Gas Journal, flows through the Strait of Hormuz stand at about 49 percent of pre-war levels, or roughly 8.5 million barrels per day. The bigger global problem, it says, is a shortage of refined products due to damaged refineries in the Gulf and Russia.

Diplomatic signals

Iranian officials confirmed that Vice President JD Vance had sent a letter aimed at reviving peace talks, and Qatari mediators have returned to Tehran. At the same time, Iran rejected the US response to its plan for reopening Hormuz, and the US carried out a strike on Qeshm Island, as we reported earlier today.