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Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…

Crude oil prices, which fell to their lowest in four weeks, staged a rebound earlier today, as traders shifted their attention from the U.S. midterms to the Middle East, awaiting the next step in the war.

Benchmarks dropped sharply on Tuesday on reports that Iran may be open to discussions on previously non-negotiable issues, but at the time of writing, Brent crude was trading at $103.60 per barrel, with West Texas Intermediate at $95.98 per barrel, after two energy consultancies warned against too much Gulf oil supply rebound optimism.

Rystad Energy said yesterday it did not expect crude oil flows out of the Persian Gulf to return to normal anytime soon, even if the United States and Iran reach some form of agreement that would end the war. Noting some of the priorities for the U.S., the firm said: “We consider it unlikely that all these points of contention can be resolved within the coming year.”

Vortexa, meanwhile, said October oil flows via the Strait of Hormuz were lower than the previous month’s, countering a string of reports saying oil exports from the Gulf were back to pre-war levels, and even exceeding them. According to the firm’s data, combined exports of crude oil, condensates, and fuels averaged 17.1 million barrels daily last month. That was down from 18.9 million barrels in total daily exports in September.

Meanwhile, “President Trump's conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction,” Phillip Nova analyst Priyanka Sachdeva said as quoted by Reuters.

“The market still has a large risk premium baked in, particularly given the strong oil flows from the Persian Gulf,” ING’s commodity team said in a note on Tuesday, adding that despite recent positive signals from both the U.S. and Iran, it was too early to get optimistic about the end of the war.

By Irina Slav for Oilprice.com

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