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Oil is falling fast as traders start pricing in the end of the Iran war, and that is mixed news for the world's biggest crude exporter.
Brent crude, the global benchmark, fell as much as 3.1% on Tuesday and dropped below $90 a barrel for the first time since August, Asharq Bloomberg reported. It had already slid about 6% on Monday.
Brent for January delivery was down 2.6% at $90.20 by mid-morning in London. US crude fell 2.4% to $84.75.
What changed
President Donald Trump said more strikes on Iran would not be necessary. He is under pressure to end the war, now in its ninth month, after his Republicans lost heavily in the US midterm elections.
"Iran is effectively finished militarily," Trump told reporters on Monday after meeting Qatar's prime minister, whose country is mediating between Washington and Tehran.
The market is betting he won't resume attacks after the Democrats' sweeping win, said Arne Lohmann Rasmussen, chief analyst at Danish advisory firm Global Risk Management. Prices could fall further, "but I think we've passed the biggest drop," he said.
Why it matters for Saudi Arabia
Prices hit a six-month high at the end of October. In under two weeks, that premium has largely gone.
For the kingdom, cheaper oil means less revenue on every barrel, just as its budget is heading past its deficit forecast. The offset is volume: more Saudi crude is leaving through Hormuz again, pushing regional exports close to prewar levels.
Lower prices also ease inflation abroad. US gasoline fell below $4 a gallon for the first time since July.
The catch
The danger has not gone away. Saudi Arabia's East-West pipeline was hit again on Monday, and talks to end the war remain stuck on Iran's demand that the US lift its naval blockade and sanctions.
What to watch
OPEC publishes its monthly oil market report on Wednesday, followed by the International Energy Agency on Friday. Both will show how quickly forecasters think supply is recovering.
