The Week in Oil: Crude Falls Below $100 a Barrel Amid U.S. Midterms Shake-up

By Giulia Petroni

Here is a look at what happened in oil markets in the week of Nov. 2-6 and what the focus will be in the days to come.

OVERVIEW: Oil prices are poised for a staggering weekly loss of 14% after a volatile week, as markets await Washington's next move on Iran following the U.S. midterms. Brent crude, the global oil benchmark, traded around $97 a barrel on Friday, while West Texas Intermediate was at $90 a barrel. "Confidence has returned to the oil market," analysts at Commerzbank said. "If diplomatic efforts appear promising, oil prices could even fall somewhat further."

GEOPOLITICAL RISKS: The oil market witnessed a sharp selloff this week, driven by growing hopes for a diplomatic solution between the U.S. and Iran after the Democratic sweep of Congress during the U.S. elections and President Trump's acknowledgment that the war contributed to widespread Republican losses. However, any change in Washington's balance of power will take time to translate into policy.

Traders now fear that the Trump administration could launch a fresh military attack on Iran, which could trigger retaliation from the Iranian regime against energy infrastructure in the region. Meanwhile, a sustained recovery in oil flows from the Middle East remains at risk due to attacks on shipping in the Strait of Hormuz and threats by Yemen's Houthi militants against Saudi Arabia and its Red Sea export route.

"The risk of renewed escalation is by no means off the table," said Barbara Lambrecht, analyst at Commerzbank. "For one thing, attacks in the Strait of Hormuz have continued unabated. For another, the positions of the parties to the conflict remain far apart in the talks."

SUPPLY AND DEMAND: Physical oil prices are signaling an easing in global supply conditions, despite continued threats to shipping. Some analysts say recovering Middle East exports and weaker demand are pushing the market back toward surplus, with high prices weighing on consumption. J.P. Morgan estimates that supply exceeded demand by 1.1 million barrels a day in September, with the surplus widening to 1.4 million barrels a day in October.

Diesel prices have followed crude lower, but there is still persistent tightness in middle-distillate supplies. U.S. inventories of diesel and heating oil fell to their lowest in more than two decades last week, according to the Energy Information Administration. Meanwhile, supply risks remain elevated amid persistent Ukrainian drone attacks on Russian refineries, casting doubt on Moscow's plans to increase diesel exports towards year-end.

Meanwhile, against the backdrop of recovering supply, major Persian Gulf oil producers are offering significant discounts on their crude to offset elevated tanker and freight costs. State oil company Saudi Aramco on Thursday cut the official selling price for December shipments of its Arab Light crude to Asia--the largest market for Middle Eastern oil--by $2 a barrel to a discount of $7 a barrel to the Oman/Dubai benchmark. "The discount on December deliveries of Arab Light to Asia is now almost as large as it was during the Covid pandemic six and a half years ago," analysts at Commerzbank said.

WHAT'S AHEAD: The International Energy Agency, the EIA and the Organization of the Petroleum Exporting Countries are set to release their latest oil-market reports next week, with investors looking for further signs of an easing in physical market conditions.

OPEC's report will be closely watched for production figures, while the IEA's latest inventory data will be a key focus. The figures are expected to point to a continued slowdown in stock drawdowns, with recent declines in OECD inventories driven largely by government reserve withdrawals, while commercial stocks have started to rebuild, according to analysts.

China's trade data will also be in focus, with crude-oil imports expected to have risen further in October, reflecting increased supplies from the Gulf region,

On the U.S. economic calendar, markets will watch for inflation data, with the consumer-price index due on Tuesday and the producer-price index on Friday. Investors will also focus on weekly jobless claims on Thursday and a series of Federal Reserve appearances for clues on the outlook for interest rates.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

November 06, 2026 12:40 ET (17:40 GMT)