Oil Hovers Near 11-Week Lows

Crude oil traded near $86 per barrel on Wednesday, hovering close to eleven-week lows on signs of easing tensions between the US and Iran. President Donald Trump suggested that additional military strikes against Iran may no longer be necessary, fueling optimism for a possible diplomatic settlement. Meanwhile, Congressional Democrats are considering leveraging the upcoming government funding deadline to push the Trump administration toward ending the conflict. However, uncertainty persists as Iran demands relief from US sanctions and the naval blockade before agreeing to peace talks. At the same time, Middle Eastern oil shipments have nearly returned to prewar levels despite ongoing attacks on vessels in the Strait of Hormuz. The US oil benchmark has fallen almost 20% from its late-October peak, reversing much of its recent gains as hopes for de-escalation strengthened and regional oil exports continued to recover.

Crude oil fell below $87 a barrel on Tuesday, its lowest level since late August, extending a 4.4% decline on Monday, as investors increasingly anticipated a diplomatic resolution to the Middle East conflict. US President Donald Trump signaled that further strikes on Iran may not be necessary. Trump described Iran’s military capabilities as effectively defeated, while maintaining that the US remained prepared to act if needed. Meanwhile, congressional Democrats are considering using the upcoming government funding deadline to pressure the administration towards ending the conflict. Oil prices reversed sharply in November, as de-escalation hopes grew and exports from the region continued to recover. Despite ongoing attacks on shipping, traffic through the Strait of Hormuz increased, bringing Middle Eastern oil shipments close to pre-war levels. Saudi shipping firm Bahri also said it was sending tankers through the waterway in coordination with the US military.

Crude oil fell below $85 per barrel on Tuesday, extending losses from the previous session and reaching its lowest level since late August amid diplomatic efforts to end the Middle East conflict. President Donald Trump expressed optimism about a possible resolution, citing “momentum toward an end” to the conflict following his meeting with Qatar’s prime minister. Meanwhile, Congressional Democrats are considering using the Dec. 11 government shutdown deadline to pressure Trump into ending the war. However, tensions remain elevated as US forces reportedly launched another strike on Iran’s Qeshm Island, while US Secretary of State Marco Rubio tempered expectations for progress in negotiations. Tanker vessels also remained targets of attacks in the Strait of Hormuz, while clashes involving Saudi Arabia and Iran-backed Houthis continued. Elsewhere, investors are awaiting monthly oil market reports from the US EIA, OPEC and IEA for further insights into global supply and demand.