Brent falls 1.5% as Iran tensions ease

Brent crude fell 1.5% to US$96.91 per barrel on Monday, while West Texas Intermediate crude declined 1% to US$89.85 as expectations of reduced US-Iran military tensions eased immediate supply concerns.

Brent had fallen 16% during the previous week, marking its steepest weekly decline since the beginning of the COVID-19 pandemic, as traders assessed the possibility of a diplomatic resolution.

"The market appears to be pricing in a relatively optimistic scenario of de-escalation, even though a comprehensive agreement between Washington and Tehran has yet to materialise," said Sugandha Sachdeva, founder of SS WealthStreet.

US President Donald Trump said on Sunday he was highly unlikely to order further attacks on Iran while negotiations to end the conflict continued, although attacks on shipping near the Strait of Hormuz remained a concern.

Sachdeva said Brent could find near-term support at US$93 per barrel, while warning that prices could retain a geopolitical risk premium without a diplomatic breakthrough and sustained normalisation of shipping through the Strait of Hormuz.

JPMorgan estimated that global oil supply exceeded consumption by 1.1 million barrels per day in September, with the surplus expected to widen to 1.4 million barrels per day in October as Middle Eastern supplies recover and production increases elsewhere.

Separately, Iran-aligned Houthi forces claimed responsibility for an attack on Saudi Aramco's offices in Riyadh on Sunday, which reportedly damaged windows but caused no casualties, adding another security concern to the regional oil market.