Brent fell below $105 this morning following a series of headlines suggesting growing momentum in U.S.-Iran peace talks, but Tehran later dismissed the reports.
U.S. midterm talks provide brief diplomatic reprieve for oil markets
– The sharp backwardation seen in global crude oil benchmarks began to flatten as markets sought to digest news of Qatar-brokered US-Iran negotiations, with Dubai’s M1-M3 structure close to zero this week.
– As the Dubai cash/futures spread is regularly used to set differentials in the Middle East, the flattening of the forward curve suggests that differentials across Asia are likely to decline soon.
– While freight from the Gulf interior remains prohibitive, rates from the U.S.-controlled Gulf of Oman have fallen slightly with a trip to China currently valued at around $17 per barrel, down $6 per barrel from a month ago.
– In European markets, oversupply in the fast market led to Brent CFDs remaining in backwardation throughout November, only for backwardation to resurface from December.
– Global crude on water reached 1.3 billion barrels in early November, up some 50 million barrels from two weeks ago, with 80% coming from Middle Eastern countries, maximizing exports ahead of a possible resumption of hostilities between the United States and Iran.
Market players
– French energy giant TotalEnergies (NYSE:TTE) has agreed to take a 30% stake in Malaysia’s Lang Lebah and B14 offshore gas fields as part of a farm-out deal involving Petronas, PTT and Kufpec of Kuwait.
– American oil major ExxonMobil (NYSE:
– Meg O’Neill, chief executive of a British energy company P.A. (NYSE:BP), has “categorically” denied rumors that the company’s board is discussing a possible spin-off of the major, saying it is imperative that it remains an integrated oil company.
– Brazil’s state oil company Petrobras (NYSE:PBR) announced a new oil discovery in the Foz do Amazonas basin, off the country’s northern coast, marking the third untapped oil discovery in the equatorial margin and increasing Morpho’s total reserves.
– American hedge fund black stone (NYSE: BX) has agreed to acquire 49.9% of the stake held by Japan’s Mitsubishi Corp (15% total) in the LNG Canada project for $3.1 billion, with the project partners selling their stakes to finance its 28 mtpa expansion.
Tuesday November 3, 2026
The ongoing negotiations between the United States and Iran, even as Tehran constantly complains about the “lack of conviction” from the White House, have given oil markets a powerful downward impulse, pushing Brent ICE below $105 per barrel, one of the most drastic daily declines in recent history. That said, the chaos ahead of the US midterm elections, with Trump launching “defensive strikes” on the Iranian island of Qeshm and suggesting he would end $4 billion in military support for Israel, will add to the volatility of the coming days.
OPEC+ keeps its quotas stable while supply stagnates. The other seven main members of OPEC+ rolled over their production quotas from November to December, sticking to 31.01 million bpd, although actual output remains 4.21 million bpd below target as wars in the Middle East limit physical supply.
Russia extends diesel ban, except for flows to the United States. Moscow extended its ban on diesel exports until January 2027 to protect domestic supplies, introducing exemptions for the United States and other key buyers that could boost November shipments to 540,000 b/d, more than double October’s average of 240,000 b/d.
Portugal plans to tighten its grip on Galp. The Portuguese government plans to increase its 8% stake in national oil company Galp (ELI:GALP) after merger talks with Spain’s Moeve collapsed, reflecting a broader drive to protect strategic energy infrastructure.
An Indigenous affair threatens plans for Canada’s midstream sector. A British Columbia First Nation has filed a lawsuit against the Canadian government for fast-tracking the 1 million bpd Pacific Link pipeline project, saying Ottawa failed to fully assess the impact on Indigenous rights before approving it.
Nigeria’s state-owned oil company is considering a profitable IPO. Nigeria’s national oil company NNPC is eyeing a 5-10% domestic IPO after 2027, with a potential secondary listing in London or New York, seeking to replicate Dangote’s successful $4.8 billion domestic IPO to fund its downstream investments.
Goldman warns of potential price hikes to $140. US banking giant Goldman Sachs (NYSE:GS) raised its December Brent forecast to $105 a barrel and raised its 2027 average to $88 a barrel, warning that oil prices could hit $140 if Gulf production remains 3.5 million bpd below 2025 levels.
Ukraine will continue its strikes against Russian refineries. Ukrainian President Zelenskyy said Ukraine would continue hitting Russian refineries until Moscow stopped attacking its energy system, dampening hopes for a diplomatic breakthrough ahead of Nov. 10-11 talks in Abu Dhabi, United Arab Emirates.
Aramco is starting to feel the pinch from the Houthis. Saudi national oil company Saudi Aramco’s (TADAWUL:2222) third-quarter adjusted net profit rose 9% year-on-year to $31.2 billion, although it fell almost 7% from the second quarter of 2026 amid relentless Houthi attacks on pipelines, refineries and terminals.
Tehran threatens shippers transiting Hormuz. Iran has warned of the detention and confiscation of all vessels owned or operated by Sinokor, Hormuz’s transit champion, threatening legal action against the South Korean shipper’s tankers from November 1.
Thailand increases taxes on imported electric vehicles. Thailand will increase excise duties on imported electric vehicles (EVs) without local content to 35% from the current 10-15% from January 2027, in a bid to localize vehicle manufacturing domestically after EV imports in September doubled year-on-year.
The IEA warns against prolonged gas sealing. The International Energy Agency has warned that strains in natural gas markets will extend into 2027 as EU storage could fall below 10% by March in the event of Hormuz LNG disruptions and colder weather, causing global LNG supply to fall by 3% this year.
Riyadh doubles its expansion of the East-West pipeline. Saudi Arabia has started work on expanding its East-West pipeline from the current capacity of 7 million b/d to 10 million b/d, with CEO Amin Nasser saying preliminary engineering is underway., with commissioning expected by 2029.
Russia will sell its stake in shipping to raise budget funds. Russia plans to sell 7.8% of its national shipping company Sovcomflot to potentially raise $200 million for its strained budget, while retaining 75% plus one share as SCF hit a net profit of $278 million in the first half of 2026 after years of losses.
Soaring gas prices prompt Egypt to cut urea. As LNG prices in the Mediterranean continue to exceed $30 per MMBtu, the Egyptian government has asked most of the country’s urea producers to reduce their operating rates by 20% amid widespread reductions in natural gas, impacting fertilizers.
Iran seeks to reduce its gasoline consumption. Iran aims to reduce its gasoline consumption to 755,000 b/d by January 2027, a 10% drop from current levels, thanks to differentiated prices and alternative fuels, as refinery outages and the prospect of a resumption of hostilities with the United States point to a gasoline shortage.
By Tom Kool for Oilprice.com
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