Brent faces election-driven selling and risks from Iran – Rabobank

Brent crude fell more than 10% to $93 per barrel, taking it below $100 for the first time since 7 October, according to Rabobank’s Global Daily. The decline followed US election results that had largely been priced in. A US shift away from Iran or direct involvement in the region would not guarantee a sustained reduction in oil prices, strategists Michael Every and Joe DeLaura argue.

Oil’s relief rally appears premature

"The outcome of the election had largely been priced in both by prediction markets—and grown-up markets—but Brent crude oil still fell by more than 10% to $93/bbl, making its way below $100/bbl for the first time since October 7."

"That instability could relatively strengthen the US strategic hand as an energy exporter, while still imposing domestic costs through higher energy prices."

"Furthermore, our Global Energy Strategist, Joe DeLaura, believes that leaving Iran as master of the Persian Gulf would not guarantee flows of oil and other key products like aluminium, helium, LNG and fertilizers."

"The Gulf countries may end up in a new war to dislodge Iranian dominance over the seas or be forced to pay up for protection."

"A US pivot away from direct involvement therefore offers no assurance of sustainably lower oil prices after the initial selloff of false relief."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)