Oil dives almost 5% as Trump signals restraint

Prices drop though attacks on ships continue near Hormuz

LONDON:

Brent crude futures were down almost 5% on Monday after hitting their lowest since early September, as US President Donald Trump downplayed the likelihood of renewed strikes on Iran, though attacks continued on ships near the Strait of Hormuz.

Brent crude futures were down $4.57, or 4.65%, at $93.75 a barrel by 1704 GMT. Their session low was $92.80 a barrel. The Brent benchmark plunged by 16% last week and touched a two-month low of $93.22, its steepest weekly drop since the start of the Covid-19 pandemic.

On Sunday, Trump said he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed. Still, both countries reported that shipping had been hit in or near the Strait of Hormuz.

"This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down," TACenergy analysts said in a note.

Last week, Trump had hinted at a resumption of attacks on Iran, and Tehran vowed to respond by striking US and Israeli targets. But there has been no sign of a large-scale US military operation.

A senior Iranian security official told the country's state media that Tehran has no plans to negotiate unless Washington takes practical steps to meet seven conditions set out in a June interim agreement.

Saudi Arabia's foreign minister and his Omani counterpart stressed in a phone call on Monday the need to press ahead with diplomatic efforts to contain the regional crisis and safeguard maritime security and sea lanes, Saudi state media reported.

Trump was also scheduled to meet the prime minister of Qatar, which has been a mediator, though senior US and Gulf officials cast doubt on the chances of an imminent deal.

Iraq has reached understandings with the US to allow Iraqi oil exports through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said in an interview with Al Jazeera on Sunday.

"Crude futures are under selling pressure once again as oil volumes continue strong through the Strait of Hormuz," said Dennis Kissler, Senior Vice President of Trading at BOK Financial.

In the Medina region, a fire was extinguished after Saudi Arabia's East-West pipeline was struck, an Energy Ministry source said, according to state media. There were no casualties and the pipeline's operations were not affected.