KEY POINTS
- Brent is on track for a 16% weekly drop, its steepest since 2020.
- Prices fell 8% Wednesday after Democrats swept the U.S. midterms.
- Ongoing tanker attacks in the Gulf are limiting the slide.
Oil prices were headed Friday for their sharpest weekly drop in years after the Republican Party’s losses in the U.S. midterm elections raised hopes of de-escalation in the U.S.-Israeli war on Iran, Reuters reported.
Brent crude futures for January fell 74 cents, or 0.8%, to $97.55 a barrel by 8:26 a.m. GMT after early gains in a choppy session. Meanwhile, U.S. West Texas Intermediate futures slipped 73 cents, or 0.8%, to $89.79.
Oil prices on track for steepest weekly slide since 2020
Brent is on course for a 16% decline this week. That would be its steepest weekly percentage drop since the start of the COVID-19 pandemic and its biggest in absolute terms in LSEG data going back to 1988. WTI, by comparison, is set to fall more than 13%.
Prices tumbled 8% on Wednesday alone after Democrats swept the midterms, settling at two-month lows. The slide also comes amid a sharp rout in technology stocks.
A potential easing of the conflict could free up more crude exports from the Middle East. Also, signs of an emerging glut are building, with spot premiums for Middle Eastern benchmarks back at levels last seen before the war.
Tanker attacks put a floor under prices
Still, the market has found some support. Prices rebounded on a surge in tanker attacks in the Persian Gulf and the Strait of Hormuz, renewing worries about supply flows from the region.
Data from Britain’s maritime security agency, UKMTO, suggested that attacks on oil-carrying ships are still running at close to record pace. So even as hopes for de-escalation grow, the risks at sea continue to limit the decline.
