The Zhitong Finance App learned that international oil prices fell for the second consecutive trading day on Tuesday, and market expectations for the US and Iran to end the eight-month conflict through diplomatic negotiations heated up, easing investors' concerns about continued interruptions in energy supply in the Middle East. However, despite the positive signals of negotiations between the two sides, the US is still carrying out limited military attacks on Iran, and commercial vessels in the Persian Gulf region continue to be attacked, which means that there is still great uncertainty about the situation in the Middle East.
As of press release, US West Texas Intermediate Crude Oil (WTI) futures fell $0.42 to $96.04 per barrel, falling below $95 during the intraday period; the international benchmark Brent crude oil futures fell $1.23 to $103.54 per barrel.
Earlier, news broke in the market that the US and Iran have made progress in negotiations to end the conflict, driving oil prices back further. On Monday, after Washington and Tehran both expressed their willingness to resolve the conflict through negotiations, international oil prices have dropped sharply by more than 7%. US President Trump told reporters on the same day that he believes Iran wants to reach an agreement and that “it is possible” for the two sides to resolve the conflict through negotiations.
Diplomatic mediation is also continuing. Qatar's Ministry of Foreign Affairs said on Tuesday that the country is continuing to mediate between the US and Iran. The Qatari delegation has gone to Tehran to hold talks in an effort to push for an agreement that can prevent further escalation of the regional situation and end the US-Iran conflict.
Earlier, due to market concerns that the US might once again expand military action against Iran after Tuesday's midterm elections, international oil prices continued to be included in the geopolitical risk premium.
There are reports that the US government is planning a new round of military strikes against Iran, causing investors to worry that energy supply in the Middle East will be further disrupted. Against this backdrop, the cumulative increase in international oil prices in October was more than 10%. However, as the Trump administration recently continues to release signals of diplomatic conflict resolution, the market has begun to re-evaluate the possibility of further escalation of the situation between the US and Iran, driving back oil prices, which had previously risen due to geopolitical risks.
However, military risks in the Middle East have not been eliminated. According to media reports citing US officials, the US launched an attack on Iran's Qeshm Island (Qeshm Island) on Monday. Relevant officials also revealed that the US military has been carrying out “limited attacks” on Iran in recent weeks. The report quoted an anonymous official as saying that the US government is deliberately keeping a low profile on related military operations to avoid sending signals to the outside world that it is preparing to escalate the conflict on a large scale.
Meanwhile, commercial shipping in the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman still faces security threats. According to data from the UK Maritime Trade Action Office (UKMTO), the region has reported at least four attacks on merchant ships since the beginning of November, indicating that safety risks on key energy transport routes still exist.
Although military operations have not completely stopped, the Trump administration has recently repeatedly emphasized the possibility of ending the conflict through diplomatic channels. US Vice President Vance said in an interview that both he and Trump are optimistic about the prospects of reaching a settlement through negotiations. “The President and I are both quite optimistic about the prospects for a possible negotiated settlement.”
US Secretary of State Rubio also said on Sunday that Trump wants to resolve the Iranian conflict through diplomatic means and is inclined to avoid further use of military force.
It is worth noting that the US-Iran conflict and its impact on energy prices have become an important issue in the US domestic economy and politics. Continued high international oil prices are driving up gasoline prices in the US, further increasing inflationary pressure and increasing consumers' living costs. As the US midterm elections approach, the energy price issue has also become one of the political pressures facing the Trump administration.
At the same time, the risk of inflation brought about by rising oil prices is affecting the Federal Reserve's monetary policy prospects. Last week, two regional Federal Reserve chairmen of the Federal Reserve said that interest rates may need to rise further to curb inflation.
Higher interest rates generally help curb inflation, but they also increase financing costs for businesses and consumers, and put pressure on economic growth. Therefore, whether international oil prices can continue to fall is not only related to US consumers' energy spending, but may also affect the market's judgment on the future path of the Federal Reserve's interest rate hike.
Overall, the diplomatic easing signals recently released by the US and Iran are weakening some of the geopolitical risk premiums in international oil prices, yet America's limited military attack on Iran continues, and key shipping routes are also facing security threats. Until a formal cease-fire or peace agreement is reached, energy supply risks in the Middle East may still cause sharp fluctuations in oil prices.