WTI retreats to around 101.00 after Trump rules out immediate Iranian strikes

• With immediate military strikes against Iran ruled out by US President Trump, WTI retreated.
• Geopolitical risks remain high amid Houthi attacks on Saudi targets and the prospect of Iranian retaliation after the elections.
• To bring down high diesel prices, Trump introduced costly policies that included relaxing sanctions on Russian fuel.

Following a gain of over 4% in the previous trading session, West Texas Intermediate (WTI) oil is easing, trading near $101.10 during Monday’s Asian session. The decline in crude followed US President Donald Trump’s decision to rule out immediate military action against Iran. According to Al Jazeera, he said, “there will not be a strike today,” having earlier suggested that Washington might have to “finish the job” or possibly secure an agreement with Tehran as Iranian and Houthi threats to American interests in the region intensified.

The possibility of renewed strikes on Iran after this week’s Israeli elections and next week’s US midterm elections nevertheless remains a concern. Iran is reportedly ready to respond by targeting Israel and the UAE.

Regional tensions were heightened further on Sunday when Yemen’s Houthis said they would keep targeting Saudi Arabia’s King Khalid Airport in Riyadh, Reuters reported. Only hours earlier, Saudi officials had announced the resumption of flights at the airport despite repeated attacks by the group.

Fighting continued in the region over the weekend. The Houthis claimed responsibility for Saturday’s attacks on the Saudi airport and oil facilities, and Saudi Arabia said on Sunday that it had intercepted further missiles and drones. After earlier Houthi strikes caused damage, the leading oil exporter restored some operations at its main airport on Sunday, although the militant group pledged to continue its offensive.

With November’s midterm elections drawing closer, persistently high diesel prices have prompted President Donald Trump to pursue a series of expensive and politically contentious measures. His administration’s efforts to reduce costs have included offering billions of dollars to farmers, loosening regulations for truckers, relaxing sanctions on Russian fuel and pressing European allies to release emergency oil reserves.

Oil retains upside bias as election-related escalation risks sustain premium

TD Securities sees crude prices retaining support over the coming weeks. The bank said, “we expect crude oil will remain skewed to the upside in the near term as escalation risk ahead of Israeli elections and US midterm elections remains elevated.” In its assessment, the continuing geopolitical risk premium supports a positive outlook for oil, notwithstanding wider market uncertainty.