On Monday, Brent crude futures hit their lowest since early September after United States President Donald Trump downplayed the likelihood of renewed strikes on Iran.
Brent crude futures were down $5.05, or 5.2 per cent, to $93.27 a barrel by 1427 GMT, having slid as low as $93.21 a barrel earlier.
US West Texas Intermediate lost $4.12, or 4.5 per cent, to $86.71.
The Brent benchmark plunged by 16 per cent last week to touch a two-month low of $93.22, marking its steepest weekly drop since the start of the COVID-19 pandemic.
On Sunday, Mr Trump said that he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed.
Both countries reported that shipping had been hit in or near the Strait of Hormuz.
“It depends on whether or not they sign a very strong agreement. The answer is, highly unlikely it’s going to be necessary,” Mr Trump told CNN in a phone interview.
Analysts react
According to Reuters, Saxo Bank analyst Ole Hansen said “Oil continues to trade lower on hopes of a US-Iran peace deal rather than concrete signs of progress,” adding that Trump’s latest comments that fresh strikes on Iran are highly unlikely have increased pressure on prices.
UBS analyst Giovanni Staunovo said: “Weakness in the physical market, supported by still-elevated flows out of the Middle East, is one factor weighing on prices.”
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In a report on Monday, Morgan Stanley said: “Dated Brent, used to price cargoes around the world, has weakened to a discount to the nearby Brent futures contract, highlighting weakness in the physical market.
The news agency said Mr Trump had hinted at a resumption of attacks on Iran after last week’s US midterm elections, but there has been no sign of a large-scale US military operation.
Iran has said it would respond by striking US and Israeli targets.
Tim Waterer, chief analyst at KCM Trade, called Trump’s comments “more measured” but said the market is still waiting to see whether the midterms have produced a lasting shift in Mr Trump’s approach to the conflict, or whether this is just another temporary change in tone.
