Oil prices have suffered their steepest weekly fall since the first months of the Covid-19 pandemic, as a Middle East price war, a flood of returning crude and rising hopes of a diplomatic end to the United States-Iran conflict combined to strip the war premium out of the market in a matter of days.
Brent crude, the global benchmark, fell more than 16 per cent last week — Reuters put the decline at about 17 per cent — its sharpest weekly percentage drop since April 2020. Reuters also reported that it was the largest weekly fall in absolute dollar terms in London Stock Exchange Group data going back to 1988. Brent ended the week at about $97.84 a barrel on Friday, and was trading at around $97.48 to $98 in early Asian trading on Monday, 9 November, with US West Texas Intermediate crude near $90.50 to $91.30. Figures checked at 14:52 PKT on Monday, 9 November 2026.
The trigger was political. The Democratic Party's sweep of the United States midterm elections last week convinced traders that Washington would move quickly to de-escalate the war with Iran that has upended energy markets since late February, and President Donald Trump said on Monday that further American attacks on Iran were highly unlikely while negotiations to end the conflict showed progress. The shift in expectations unwound the fear premium that had kept prices elevated for months.
But politics is only part of the story. Behind the price collapse is a market that is suddenly awash with crude. Reuters reported that oil exports through the Strait of Hormuz, the narrow waterway at the mouth of the Gulf, have recovered sharply since September, averaging 10.3 million barrels a day in October after falling to virtually nothing in the first month of the war, as Gulf producers moved tankers in convoys protected by the US Navy. Total regional crude exports reached 16.6 million barrels a day in October, just short of the pre-war average of 17 million, according to data firm Kpler.
Global production tells the same story. Consultancy Energy Aspects put worldwide crude output at 85 million barrels a day in October — the highest since the war began and above the five-year average of 83 million. JPMorgan estimated that global oil supply exceeded consumption by about 1.1 million barrels a day in September, with the surplus expected to widen to 1.4 million barrels a day in October. A Bloomberg survey found output from OPEC members had risen to 88 per cent of the volume the same producers were pumping in February.
Faced with a glut, Middle East producers have turned on each other. Saudi Arabia cut the December price of its flagship Arab Light crude for Asian customers by $2 a barrel from November, pushing the discount against the Oman-Dubai average to $6.50 a barrel — the lowest since the pandemic month of May 2020. Spot premiums for Middle Eastern crude benchmarks have collapsed alongside it: Oman's premium to the Dubai benchmark fell from $34 a barrel in mid-September to just 95 cents last Tuesday, its weakest since July, before recovering slightly to $1.76 on Thursday, Reuters data showed.
The week had begun with a violent lurch lower. Brent fell 8 per cent in the session on 4 November, the day after the midterm results, closing at its lowest level in two months, before rebounding on 5 November as attacks on tankers in the Gulf and the Strait of Hormuz rekindled fears about crude flows. Brent rose $3.67, or 3.88 per cent, that day to $98.29, while WTI gained $2.40 to $90.52 — a reminder that the physical risks have not gone away even as the price has fallen.
Those risks were underlined again over the weekend. Yemen's Houthi rebels claimed responsibility for a missile attack that damaged the offices of Saudi Aramco, the state oil giant, in Riyadh on Sunday, and Saudi forces retaliated by destroying two missile launchers. Attacks on vessels transiting the Strait of Hormuz have continued, and traders say any renewed escalation could quickly reverse the recent decline and send prices higher again.
For now, though, the market's direction of travel is clear, and analysts are openly discussing how far prices could fall if diplomacy succeeds. Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia, wrote in a note cited by Bloomberg that a deal lifting the American naval blockade of Iran could send Brent down to between $70 and $85 a barrel. India's crude basket, which averaged nearly $120 a barrel in October, had already eased to $105.39 so far in November, according to the Petroleum Planning and Analysis Cell — though retail petrol and diesel prices in Indian cities remained largely unchanged on Monday, and a fall in crude does not automatically reach the pump.
The week ahead will test whether the slide has further to run. Three major forecasting agencies publish their monthly oil market reports in the coming days: the US Energy Information Administration on Tuesday, OPEC on Wednesday and the International Energy Agency on Friday. Each will offer a fresh reading of supply, demand and the state of the war-disrupted market — and each has the power to move prices sharply in either direction.
What happens next will be decided above all by the fate of the US-Iran negotiations, mediated in part by Qatar and Pakistan, and by the safety of shipping through the Gulf. If talks advance and the blockade lifts, the glut deepens and prices could fall much further. If they break down, or if attacks on tankers escalate, the war premium could return just as fast as it vanished.
This post is market news information only, not financial advice.
