Oil Slides on Diplomacy Hopes and Oversupply Signs,
(MENAFN- MENAFNEditorial) Oil prices fell on Friday and were on track for a sharp weekly decline, as diplomatic efforts between the US and Iran pushed concerns over a new escalation. US President Dona’d Trump discussed Qatar’s mediation with the emir, while Washington is reviewing a nuclear proposal submitted by Tehran, raising hopes of a diplomatic breakthrough. At the same time, US midterm results also helped reduce concerns about additional tensions.
The wider supply picture adds to the bearish pressure, as estimates put the market back into surplus in September, with a wider gap in October. Recovering Middle Eastern flows and higher output elsewhere were met by weaker demand. This comes even after commercial inventories were drawn down in the months following the start of the tensions.
However, shipping disruptions in the Strait of Hormuz could still lend prices some support. Security alerts and tanker incidents continue to draw attention to key energy routes and infrastructure. Any disruption there would push prices back up.
Looking ahead, without concrete diplomatic progress, oil prices might not decline sustainably. A breakthrough that secures a commitment to reopen Hormuz would help bring more supply to the market. Stalled talks or an escalation of tensions could quickly revive upward momentum.
The wider supply picture adds to the bearish pressure, as estimates put the market back into surplus in September, with a wider gap in October. Recovering Middle Eastern flows and higher output elsewhere were met by weaker demand. This comes even after commercial inventories were drawn down in the months following the start of the tensions.
However, shipping disruptions in the Strait of Hormuz could still lend prices some support. Security alerts and tanker incidents continue to draw attention to key energy routes and infrastructure. Any disruption there would push prices back up.
Looking ahead, without concrete diplomatic progress, oil prices might not decline sustainably. A breakthrough that secures a commitment to reopen Hormuz would help bring more supply to the market. Stalled talks or an escalation of tensions could quickly revive upward momentum.
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