The Zhitong Finance App learned that as traders increase their bets that the Middle East war is expected to be resolved, the decline in oil prices has further deepened. After falling nearly 6% on Monday, the global benchmark Brent crude oil futures price fell nearly 3% to $89.96 per barrel on Tuesday (as of press release), falling below $90 per barrel for the first time since August. WTI crude oil futures fell more than 2% to $84.63 per barrel.
At the same time, as international oil prices fell, gasoline prices also declined. The price of gasoline in the US fell below $4 per gallon for the first time since July, relieving some of the pressure on US Federal Reserve officials to deal with high inflation, although it is still clearly high in terms of seasonal levels, and other costs are still high.
According to data from the American Automobile Association (AAA), the average retail price of regular gasoline across the US fell to $3.98 per gallon on Monday, continuing the decline since late September. This is the first time since mid-July that the average price of gasoline across the US has fallen below this psychologically significant mark. Furthermore, the market has shown some signs of easing. US gasoline inventories, which have been below seasonal levels since late April, have begun to pick up.
Since the US and Israel launched a military attack on Iran at the end of February this year, gasoline prices at US gas stations have soared sharply due to the blockade and disrupting the export and transportation of crude oil and refined oil products due to the blockade of the Strait of Hormuz, which disrupts the export and transportation of crude oil and refined oil products. Other supply disruptions have also increased market pressure. The escalating Ukrainian attack on Russian refineries has tightened supply in the global fuel market. As winter approaches and demand for driving falls, gasoline prices in the US usually fall, but currently prices are still about 19% higher than the seasonal average.
Since the US midterm elections, market hopes for progress in peace negotiations and the restoration of energy supply in the Middle East have heated up. US congressional Democrats are considering whether to use the December 11 government shutdown deadline to pressure Trump to end the conflict, which has now entered its ninth month.
After the midterm election results showed that the conflict was unpopular, Trump said, on the one hand, that the US is still in a state of “waiting and ready to act at any time,” and on the other hand, he also sent a signal that he hopes to gradually end the conflict. Trump told reporters on Monday that there currently seems to be no need for the US to take military action against Iran. Trump said, “At this stage... military action doesn't seem necessary. But we are waiting very hard and are ready to act as soon as the situation changes.” He also said, “I think this conflict will soon be over.”
It is unclear whether Trump's tone of moderation will translate into substantial progress in ending the war initiated by the US and Israel. Israeli Prime Minister Binyamin Netanyahu lost his parliamentary majority last month, and the country's political uncertainty has further intensified since then.
An official familiar with the matter said that negotiations will continue and that the military situation may not escalate during the negotiations. The source said that during the meeting with the Prime Minister of Qatar, the US side sent such a signal — maintaining current diplomatic contacts and putting economic pressure on Iran at the same time is the best way to resolve this conflict.
In intermittent negotiations over the past few months, Iran has insisted that the US end its maritime blockade of Iranian ports and lift sanctions. Meanwhile, the US urged Iran to stop attacking ships in the Strait of Hormuz and make concessions on the nuclear program.
Despite attacks on ships, oil continues to be shipped out of the region. In the past few months, the Strait of Hormuz experienced a wave of ship traffic, bringing the total volume of oil transportation in the Middle East close to pre-war levels. Saudi shipping company Bahri said on Tuesday that it is coordinating with the US military to arrange for some tankers to pass through this waterway.
However, risks to the energy infrastructure in the Middle East remain. According to reports, Saudi Arabia's key east-west oil pipeline was attacked in the Medina region on Monday, causing a limited scale fire, which has since been extinguished. Geopolitical risks in other regions also remain a source of concern. Ukraine continues to attack Russian refineries, while Russia is also targeting energy and civil infrastructure. In Abu Dhabi, negotiations between Russia and Ukraine are ongoing, mediated by the United States. Compared with previous rounds of negotiations, the diplomats attending this time are at a higher level. This is seen as a sign that the two sides have shown greater openness to substantive negotiations after several months of stalemate.