New Delhi: Global crude oil prices edged higher on Friday, November 6, with Brent crude trading close to $99 per barrel, even as the benchmark remained on course for a steep weekly decline of nearly 13%. Hopes of a possible diplomatic breakthrough in the US-Iran conflict have eased some concerns about supply disruptions, but continuing tensions across the Middle East and attacks on energy infrastructure have kept the oil market cautious.
Brent crude futures had surged 3.8% on Thursday to settle at $98.29 per barrel. US West Texas Intermediate (WTI) crude also recovered, gaining 2.7% to close at $90.52 per barrel. The rebound followed a sharp sell-off on Wednesday, when both benchmarks fell more than 8% and recorded their lowest settlement levels since August 31.
Despite the recovery, the weekly decline reflects a significant shift in market sentiment. Investors have been assessing the possibility of reduced geopolitical tensions, while remaining alert to developments that could disrupt crude production and transportation.
US political developments raise hopes of de-escalation
One of the factors influencing oil prices is the changing political situation in the United States. Hopes of a diplomatic breakthrough have increased after the Democrats secured control of both houses of the US Congress in the midterm elections.
The political outcome could potentially limit President Donald Trump’s support for the war against Iran and create greater pressure for a diplomatic approach. Tehran is also reportedly reviewing proposals submitted by mediators concerning its nuclear programme.
However, the possibility of negotiations does not mean that the conflict is close to a definite resolution. The situation remains uncertain, with both sides facing significant disagreements over the conditions required for de-escalation.
Iran has maintained that the US naval blockade of its ports must be lifted, sanctions eased and frozen assets released before it fully reopens the Strait of Hormuz. These demands remain central to the wider dispute over regional security and energy supplies.
The Strait of Hormuz is a critical route for global oil shipments. Any restriction on movement through the waterway can affect the availability of crude in international markets and increase transportation costs.
Vessel incidents keep shipping security in focus
Even as oil prices have eased from recent highs, maritime security concerns continue to threaten the movement of energy supplies.
At least five vessel-related incidents have been reported in the Persian Gulf since Sunday, according to the UK Maritime Trade Operations (UKMTO). These incidents have highlighted the risks faced by commercial shipping operating in the region.
Iran’s Islamic Revolutionary Guard Corps also said that two oil tankers and a tugboat caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz.
Such developments can influence oil prices even when there is no immediate reduction in crude production. Shipping companies, insurers and energy traders closely monitor threats to vessels because disruptions can increase freight charges, insurance premiums and delivery times.
The possibility of further incidents means that the market continues to factor in a geopolitical risk premium, despite the recent fall in benchmark prices.
Houthi attacks add to concerns over Saudi oil exports
Developments around the Red Sea have created another source of uncertainty for the oil market.
Saudi Arabia has issued alerts over potential threats to Yanbu, an important oil export hub on the Red Sea coast. The warnings came amid attacks by Yemen’s Iran-aligned Houthi group, adding to concerns about the security of regional energy infrastructure and shipping routes.
Yanbu is strategically important because it provides an alternative export route for Saudi crude that does not depend entirely on shipments passing through the Strait of Hormuz.
Any threat to facilities or transportation infrastructure in the Red Sea region could complicate efforts to maintain uninterrupted oil exports. It also highlights how the conflict’s impact extends beyond the immediate area around Iran and the Persian Gulf.
For international oil markets, the security of export terminals and shipping corridors is as important as the availability of crude at production sites.
Ukraine attacks on Russian refineries create diesel supply concerns
The risks to global energy supplies are not limited to the Middle East. Ukraine’s renewed attacks on Russian oil refineries have raised concerns about Russia’s ability to export diesel.
Refinery disruptions can affect the availability of refined petroleum products even when crude oil production continues. Diesel is particularly important for transportation, agriculture, manufacturing and industrial activity.
Any reduction in Russian diesel exports could tighten supplies in international markets and put pressure on prices. The development adds another layer of uncertainty at a time when traders are already monitoring the impact of the US-Iran conflict.
The combination of Middle Eastern shipping risks and disruptions to Russian refining capacity demonstrates why oil and fuel markets remain sensitive to geopolitical developments in multiple regions.
Brent crude could return to $110-$125 range if tensions escalate
The recent decline in oil prices has not removed the possibility of another sharp rally. Eurasia Group has reportedly lowered its estimate of renewed US strikes on Iran to 60% from 65%. At the same time, it reduced the probability of a diplomatic agreement to 10% from 20%.
The research firm raised the likelihood of a prolonged standoff to 30% from 15%, indicating that a lasting resolution remains uncertain.
Eurasia Group has warned that further escalation could push Brent crude back into the range of $110-$125 per barrel. Such a move would represent a substantial increase from the levels recorded on Friday.
On the supply side, Gulf crude exports have recovered to levels close to those seen before the war. However, transportation costs remain elevated, suggesting that the energy trade has not returned completely to normal.
The outlook for oil prices will therefore depend on whether diplomatic efforts can reduce tensions and whether shipping routes remain safe. A sustained improvement in regional security could support further price declines, while renewed attacks or restrictions on exports could quickly reverse the trend.
Oil market remains vulnerable despite weekly decline
Brent crude’s nearly 13% weekly fall indicates that traders have begun pricing in the possibility of reduced tensions. However, the recovery towards $99 per barrel on Friday shows that uncertainty remains firmly in the market.
The Strait of Hormuz, Persian Gulf shipping incidents, threats around Saudi Arabia’s Red Sea export infrastructure and attacks on Russian refineries continue to influence expectations about global supply.
For oil-importing countries such as India, sustained increases in international crude prices can raise the cost of energy imports and put pressure on domestic fuel prices, inflation and the external trade balance.
The immediate direction of the market will depend largely on developments in the US-Iran conflict and the security of major energy routes. Until there is greater clarity, the weekly decline in crude prices may offer only temporary relief to oil consumers and importing economies.