Oil continued to fall today. Brent sank below $92 per barrel after falling almost 6% on Monday; WTI is trading around $86. On October 30, Brent was about $116, but as recently as yesterday morning it was at $97; so, the market has lost more than 20% from the six-month high. The reason is a shift in White House rhetoric: after the midterm results, which showed the conflict is unpopular, Donald Trump signaled he is ready to wind down a war that has been going on for nine months.

Political arithmetic also works against escalation. Democrats in Congress are discussing whether to use the December 11 government shutdown deadline to pressure the president to end the conflict. Domestic instability in Israel adds uncertainty as well: Prime Minister Benjamin Netanyahu lost his parliamentary majority at the end of October.

However, there is no real progress yet. Iran demands the lifting of the maritime blockade of its ports and sanctions relief, while Washington seeks an end to attacks on vessels in the Strait of Hormuz and concessions on the nuclear program. Secretary of State Marco Rubio cooled breakout hopes on Sunday, calling some of Tehran's demands "outrageous and absurd." Infrastructure risks remain: on Monday the East-West oil pipeline in Saudi Arabia near Medina was attacked, causing a limited fire that was quickly extinguished. Last week, Brent posted the sharpest weekly decline since April 2020 (excluding contract roll effects), and such pace is rarely sustainable.

Three key reports are ahead: today the US Energy Information Administration's monthly review, OPEC's report on Wednesday, and the International Energy Agency's review on Friday. They will show how quickly supply is outpacing demand. All this suggests oil is currently trading on expectations of a deal rather than on real changes in deliveries. I believe that Brent will most likely hold in the $85–$92 range in the coming sessions, and further declines will require confirmation of progress in negotiations. If a new attack in the Strait of Hormuz or a breakdown of talks returns escalation, I would not rule out a quick return above $97, where the price was as recently as yesterday.

Technical picture on oil

Buyers need to take the near resistance at $87. That would allow a target of $89, above which it will be rather difficult to push. The farther target is the $92 area. On a drop, bears will try to take control of $84. If they succeed, a break of that range would deal a serious blow to long positions and push oil down to a low of $81 with the prospect of reaching $78.