Oil slid to late-August lows as Trump signals Iran restraint and Hormuz flows surge

Global crude oil futures tumbled on Monday to their lowest settlements since late August after US President Donald Trump downplayed the likelihood of renewed strikes on Iran and robust export flows confirmed a loosening physical market.

Crude benchmarks suffered heavy liquidation on Monday, extending last week's double-digit rout. January Brent tumbled $5.75, or 5.85%, to settle at $92.57 a barrel before sliding past $7 lower in post-settlement trade. WTI dropped $3.98, or 4.38%, to finish at $86.85, compressing the transatlantic spread inward to $5.72 as both contracts plumbed two-and-a-half-month lows.

Diplomatic de-escalation dismantled lingering risk premia. Selling accelerated after Trump stated fresh military strikes on Iran were highly unlikely while peace talks advanced, ahead of meetings with Qatari mediators. Downward momentum deepened as Iraq confirmed an agreement with Washington establishing an export shipping lane near Oman, ensuring uninhibited crude transit through the Strait of Hormuz.

Emerging physical surpluses reinforced the retreat. Morgan Stanley reported physical Dated Brent slipped to a discount against nearby futures, while JPMorgan estimated a 1.4-million-bpd October global oil surplus after OPEC production jumped 1.38 million bpd. However, Gelber & Associates noted regional volatility persists after Houthi attacks damaged Aramco's Riyadh offices and struck the East-West pipeline.