Oil had its worst week in months. Why it bounced back towards $100

What happened

Oil prices swung sharply this week. On Wednesday 4 November, the day after the US midterm elections, Brent crude fell by more than 8% to about $93.5 a barrel, its lowest settlement in more than two months, as traders bet that the United States and Iran were moving towards a deal. An Iranian proposal was reportedly sent to Washington through Qatar. Brent had already fallen 7.6% on Monday when Iran signalled it was open to talks.

The fall did not last. On Thursday Iran reported three more tanker attacks in the Strait of Hormuz, and Brent rose 3.9% to $98.29. On Friday it briefly topped $100 before easing back, still on course for a weekly fall of about 12%. US crude (WTI) traded around $91.

Why hopes move prices faster than ships

An oil price combines today's supply and demand with traders' fears about tomorrow. A credible path to peace removes much of the fear, the risk premium, almost instantly. But the physical market depends on tankers actually passing through Hormuz, and that has not returned to normal: ANZ's Daniel Hynes estimated flows at below 60% of capacity. Each new attack reminds traders that a deal on paper is not oil on the water.

Views differ on what comes next. Bob McNally of Rapidan Energy Group put an 80% chance on fighting resuming. JPMorgan, by contrast, estimated that the world already had a surplus of about 1.4 million barrels a day in October, as high prices cut demand, which would weigh on prices if Gulf exports recover.

Where it sits in the chain

Oil is the external shock at the start of the chain. Its price feeds fuel costs and inflation (Link 1), and this week it also helped lower the inflation US households expect.

What to watch

• Any formal US–Iran talks, and the terms for reopening Hormuz fully.
• Tanker incidents and insurance costs in the Gulf.
• The OPEC+ meeting on 29 November on 2027 output.