Brent Books Its Worst Week Since 2020 at $98.32 as Peace Bets Meet a Still-Unhealed Hormuz
Brent settled the week at $98.32 per barrel, down 16.42 percent, its steepest weekly fall since 2020, as post-midterm de-escalation bets and rising OPEC exports crushed the war premium, even though Iran reported two tankers hitting mines in the Strait of Hormuz on November 8.
Crude closed out its worst week in six years on Friday, with January Brent settling at $98.32 per barrel, down 16.42 percent on the week, and December WTI at $90.83, down 12.76 percent, according to CCTV and Securities Times data cited by Sina Finance. EnergyReader's Sunday morning call, which tracks the physical assessments, put Brent's weekly fall at 13.6 percent to $97.97, the largest since 2020, and noted that managed-money net length fell by 3,377 contracts in ICE Brent and 14,468 in NYMEX WTI in the latest CFTC week. The market is still 5.1 percent above its 200-day moving average, a reminder of how much risk premium the Iran war had built in.
Two forces did the damage. First, after the Democratic sweep in the US midterms, traders repriced the odds of a swift end to the US-Iran conflict, with Qatar confirming its mediation continues and the vice president working behind the scenes on a possible new deal. Second, the physical balance loosened: OPEC+ decided to keep December quotas unchanged, and Saudi Arabia, the UAE, Iraq and Kuwait grew their combined October crude exports 10 percent to more than 15 million barrels per day. Saudi Aramco also slashed December official selling prices for all Asian grades by a uniform $2 per barrel, setting Arab Light at a $7 discount to Dubai/Oman, the lowest since June 2020, a clear signal that Middle East barrels are chasing buyers.
Yet the floor under prices is real. Iran's Revolutionary Guard said two tankers caught fire after hitting mines in the Strait of Hormuz in the early hours of November 8, and Reuters counted at least five vessel incidents in the Gulf since Sunday, with a tanker reported burning after a strike on November 8, Gulf News reported Monday. Murban physical crude jumped 3.42 percent to $99.17, about $1.70 above Brent futures, showing buyers are still paying up for actual Gulf barrels even as paper prices sink. IMF PortWatch recorded just one Hormuz transit on November 1 against a pre-crisis baseline of 85 a day.
ING's commodity team argues that in the absence of escalation the market will keep slowly giving back the risk premium, but analysts from KCM Trade and FXPro caution that the midterm result does not guarantee de-escalation. This week's calendar adds the EIA Short-Term Energy Outlook on Tuesday and US inflation data, and any new Hormuz incident or a breakdown in the Qatar-channel talks could quickly reverse the newest leg of the slide.