Oil prices were steady Monday after President Donald Trump downplayed the likelihood of new strikes on Iran, though attacks on ships near the Strait of Hormuz kept supply concerns in focus.
Brent crude inched up 3 cents to $98.35 a barrel by 0427 GMT, while U.S. West Texas Intermediate rose 0.5% to $91.30 a barrel. Brent fell 16% last week, its steepest weekly drop since the start of the COVID-19 pandemic.
"Despite the recent optimism surrounding a potential diplomatic breakthrough, the underlying geopolitical risks remain elevated, and the possibility of renewed military escalation cannot be ruled out," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
"The market appears to be pricing in a relatively optimistic scenario of de-escalation, even though a comprehensive agreement between Washington and Tehran has yet to materialise," she said.
Trump said Sunday he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progress, even as both countries reported that shipping had been hit in or near the Strait of Hormuz. He had hinted at renewing attacks on Iran after last week's U.S. midterm elections, but there has been no sign of a large-scale U.S. military operation. Iran has said it would respond by striking U.S. and Israeli targets.
Tim Waterer, chief analyst at KCM Trade, called Trump's comments "more measured" but said "the market is still waiting to see whether the midterms have produced a lasting shift in Trump's approach to the conflict, or whether this is just another temporary change in tone."
Oil is headed for a glut again as recovering Middle Eastern oil flows, rising production from other countries and weak demand have pushed global supply above consumption, JPMorgan said in a report Friday, estimating a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October.
Separately, the Houthis claimed responsibility for an attack on Saudi Aramco's offices in the capital Riyadh on Sunday that left windows blown out but no reported casualties.
