WTI falls as OPEC+ output rises and US and Iran avoid further escalation

• WTI declined as both the US and Iran continued to refrain from further military escalation.
• Before reopening Hormuz, Iran demanded the removal of sanctions and an end to the blockade, while rejecting the surrender of enriched nuclear material.
• October production at OPEC+ rose by 2.04 million barrels daily to 41.23 million, with Saudi Arabia leading the increase despite disruptions.

At around $85.00 per barrel in Thursday’s Asian trading, West Texas Intermediate (WTI) oil is extending its decline for a fifth consecutive day. The retreat in crude prices comes as negotiations between the United States (US) and Iran remain at an impasse, although neither side is currently pursuing further escalation.

Nuclear issues must feature in any preliminary negotiations to end the war, Washington maintains. A senior Iranian security official, however, dismissed that central condition, saying Tehran would not permit a single atom of its enriched nuclear material to leave the country. Iran has also restated its demand that the US remove sanctions and bring the naval blockade to an end before the Strait of Hormuz reopens.

October crude production by OPEC+, the alliance comprising the Organization of the Petroleum Exporting Countries and partners including Russia, rose sharply. The group produced 41.23 million barrels per day that month, according to OPEC’s monthly report published on Wednesday. Output was about 2.04 million barrels per day higher than in September, with a substantial increase from Saudi Arabia accounting for most of the rise.

Oil Faces Persistent Risk of Renewed US–Iran Escalation

With the geopolitical outlook for oil still highly uncertain, Rabobank analysts warn that markets cannot yet rule out a renewed escalation in US–Iran tensions. They note that “presuming this was achieved last weekend, where other reports suggest the US was moments away from striking, that means we could still be looking at more fighting by mid- to end-November, at which time a third US aircraft carrier will be in the region.” Describing the possible timetable and accumulation of US military assets as “a distressing report,” they highlight the continuing risk of further conflict.