WTI Tests $85 as U.S.-Iran De-Escalation Seen


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - Crude oil futures hit three-month lows on Monday (11/9) 
as energy traders priced in a rapidly unwinding geopolitical risk premium 
following signals of cooling military escalation between the U.S. and Iran.

   NYMEX WTI crude for December delivery fell $3.98, or 4.38%, to settle at 
$86.85 bbl, after falling earlier to $85.02 - a level not seen since August. 
ICE Brent crude for January delivery dropped $5.75, or 5.85%, to close at 
$92.57 bbl, off a session low of $90.56. 

   Downstream refined products mirrored the weakness across the energy complex. 
NYMEX ultra-low sulfur diesel (ULSD) for December delivery eased $0.1169, or 
2.70%, to finish at $4.2148 gallon after a drop to $4.1502. NYMEX reformulated 
gasoline blendstock for oxygenate blending (RBOB) retreated $0.1258, or 4.53%, 
to end at $2.6509 gallon for the December contract, following a session bottom 
at $2.6144. 

   The sell-off accelerated after U.S. President Donald Trump indicated over 
the weekend that he was "highly unlikely" to order new military strikes on Iran 
while diplomatic negotiations progress. The comments, marking a sharp pivot 
from pre-election rhetoric, added to bearish sentiment triggered by last week's 
U.S. midterm election outcome, in which Democrats secured control of both 
houses of Congress.

   The broader market focus shifted back toward physical supply fundamentals, 
where global crude balances face surplus pressures estimated by institutional 
analysts at 1.4 million bpd. 

   Broader macroeconomic headwinds and a softening U.S. dollar failed to stem 
the slide, as the U.S. dollar index slid 0.644 points, or 0.63%, to 101.535 
against a basket of foreign currencies. 

   On the diplomatic front, a Qatari delegation submitted Tehran's latest 
proposal in person on Monday, though officials in both Doha and Washington 
dampened expectations of an immediate breakthrough, noting that talks remain 
ongoing. Iranian Foreign Minister Abbas Araghchi reaffirmed that while 
proposals are moving through regional channels, formal agreement has not been 
reached.

   Despite the drop in futures, maritime security risks across the Persian Gulf 
and the Strait of Hormuz continue to disrupt regional logistics. Maritime 
insurance rates for Strait of Hormuz transits remain elevated at 6% to 10% of 
hull value, maintaining shipping costs for standard crude tankers at $6 million 
to $10 million per voyage.

   Traders are now awaiting a series of major monthly reports scheduled for 
release later this week, including the U.S. Energy Information Administration's 
Short-Term Energy Outlook on Tuesday, the OPEC Monthly Oil Market Report on 
Wednesday, and the International Energy Agency's Oil Market Report on Friday.




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