Oil Prices Rebound as Hopes for US-Iran Deal Diminish

Both benchmarks rose from the start of the week, although they remained well below late-October levels, when Brent was above $110 a barrel and WTI topped $100. Reuters reported Tuesday, citing the Washington Institute for Near East Policy, that 37 vessels were attacked in the Strait of Hormuz in October — a record for the month. The International Maritime Organization says 130 vessels have been attacked in the area since the war began.

Houthi attacks on Saudi infrastructure are also continuing, including another strike on the East-West pipeline. The attacks add to uncertainty around regional oil supplies and limit the scope for prices to fall.

Even if an agreement is reached, increased shipping through the Strait would depend on clearing mines, insurance costs and whether shipowners are willing to take the risk, LSEG Oil Research said earlier this week, according to Reuters.

FxPro chief market analyst Alex Kuptsikevich said the geopolitical premium in oil prices was gradually fading as flows from the Persian Gulf improved. Oil had fallen more than 20% from its late-October highs as investors priced out some of that risk, he said in a note Tuesday. Kuptsikevich also cited falling transport costs and production and exports returning to pre-war levels. A Reuters survey of experts put OPEC production at 22.87 million barrels a day in October, close to 90% of February levels.