Oil Falls as Trump Sees Further Iran Strikes as Unlikely

January Brent crude fell 5.8% to $92.57 a barrel, while December West Texas Intermediate settled 4.4% lower at $86.85. Prices had also slid last week as traders weighed the prospects for diplomacy after Democrats won the U.S. midterm elections.

Trump made the comments in a CNN interview Sunday. On Monday, he met behind closed doors at the White House with Qatari Prime Minister Mohammed bin Abdulrahman al-Thani to discuss Qatar’s mediation efforts. Mizuho Securities USA commodity specialist Robert Yawger said the energy market’s focus appeared to have shifted toward a diplomatic solution, rather than a U.S.-Israeli strike targeting Iran’s nuclear program and the Islamic Revolutionary Guard Corps.

Iranian Foreign Minister Abbas Araghchi said talks with Washington had made no progress and that Tehran was waiting to see whether the U.S. administration would change its position after the elections. Rystad Energy chief economist Claudio Galimberti said the Republican defeat could leave Iran less willing to compromise in the near term. The period before the new Congress is sworn in in January could also give the administration a window to apply military pressure, he said. Rystad’s base case remains one of “elevated near-term escalation risk.”

Market indicators suggest supply pressures may be easing: the spread between the nearest Brent futures contracts narrowed to about $2.60 a barrel from nearly $4 at the end of last week, and physical crude was trading below futures, MUFG said. But BOK Financial’s Dennis Kissler said tanker rates would need to fall substantially for oil prices to decline much further.

Over the weekend, Saudi Arabia faced missile and drone attacks. Falling shrapnel caused limited damage to an administrative building belonging to Saudi Aramco in Riyadh, the Energy Ministry said; no casualties were reported. Saudi air defenses intercepted several missiles, according to the Saudi-led coalition.

The U.K. Maritime Trade Operations reported that an outbound tanker was hit by an unidentified projectile in the Strait of Hormuz. Its crew was safe, with no environmental impact reported. In a separate incident, a tanker caught fire about eight nautical miles northwest of Khasab, Oman, and its crew was evacuated. The cause was not specified.