Crude oil fell below $86 a barrel on Tuesday—its lowest level since late August—extending Monday’s 4.4% decline, as investors increasingly priced in the likelihood of a diplomatic resolution to the Middle East conflict. US President Donald Trump indicated that additional strikes on Iran might not be necessary, characterizing Iran’s military capabilities as effectively neutralized while stressing that the US remained ready to act if required.
At the same time, congressional Democrats are weighing the use of the upcoming government funding deadline as leverage to push the administration toward ending the conflict. Oil prices have reversed sharply in November amid rising hopes of de-escalation and a continued recovery in exports from the region. Despite persistent attacks on shipping, traffic through the Strait of Hormuz has increased, bringing Middle Eastern oil flows close to pre-war levels. Saudi shipping company Bahri also reported that it is sending tankers through the strait in coordination with the US military.