Markets
Brent Lost 16% in a Week, Its Steepest Drop Since 2020
Brent crude settled at $98.32 on November 6, down more than 16% on the week, its steepest weekly fall since 2020, as traders bet on a US-Iran deal.
A week ago oil traders were pricing a long war. Brent settled at $117.64 a barrel on Friday, October 30; by Friday, November 6, it was at $98.32, up 3 cents on the day but down more than 16% on the week, its steepest weekly fall since the start of the pandemic in 2020. US crude, WTI, ended at $90.83, down nearly 13%. Most of the move came in two steps: Monday's slide on reports of Qatari-mediated talks and Wednesday's 9.7% drop, when the US midterm results were read as raising pressure on Washington to settle.
The talks have produced reports, not an agreement. Iran has sent a nuclear proposal to Washington through Qatar, Reuters reported, citing a senior Iranian official, and Tehran has said the Strait of Hormuz could reopen within two days if its demands are met. According to IranWire, those demands include an end to the US naval blockade, sanctions relief and the release of frozen assets before any full deal. No framework has been announced, and Iran reported three more attacks on tankers on Thursday.
That is why the floor held near $93. Brent's low for the week was about $93.22 on Thursday, and it spent the last two sessions back around $100. Flows through Hormuz are still below 60% of capacity, according to an analysis cited by IranWire, so physical supply has not improved as much as the price implies. Bob McNally of Rapidan Energy Group told CNBC he sees an 80% probability that fighting resumes, which would send both benchmarks back above $100; Lombard Odier's strategists share that view.
The fall changes the inflation arithmetic as much as the oil market. Gasoline drove more than half of September's 0.6% rise in US consumer prices, and the Bank of England raised rates on Thursday largely because of energy. A Brent price under $100 that lasts would take some pressure off headline inflation into the winter, though not soon enough to change the October CPI due on Tuesday, which covers a month when Brent averaged well above $100.
This week's calendar gives both sides something to trade. The EIA's Short-Term Energy Outlook arrives on Tuesday, a month after it raised its fourth-quarter Brent forecast to $105, and OPEC's monthly market report on Wednesday, ahead of the OPEC+ ministerial meeting on November 29. A risk premium that took months to build has been removed in five days; the speed of the fall says more about positioning than about barrels, and it can return just as quickly if the talks stall.