Oil prices ease to two-month lows as US downplays further Iran strikes

By Scott DiSavino

NEW YORK, Nov 10 (Reuters) - Oil prices eased to a two-month low on Tuesday, after US officials downplayed the need for additional military action against Iran, easing fears of additional Middle East supply disruptions.

In early trade, prices fell by more than $3 a barrel, but clawed back some losses after Iran's top security official Mohsen Rezaei said there are currently no negotiations taking place between Tehran and Washington, in an interview with pro-Iran broadcaster Al-Mayadeen.

Brent futures fell $1.08, or 1.2%, to settle at $91.49 a barrel. US West Texas Intermediate (WTI) crude fell 81 cents, or 0.9%, to settle at $86.04.

Both crude benchmarks closed at their lowest since August 31 for a second day, and both contracts stayed in technically oversold territory.

US Secretary of State Marco Rubio said he told Group of Seven allies that the US economic sanctions and naval blockade are working so US President Donald Trump does not need to conduct major combat operations against Iran.

Rubio made the comments during a meeting in Paris of foreign ministers from the G7: Britain, Canada, France, Germany, Italy, Japan and the US, as well as the European Union.

On Monday, Trump said he plans to hold off on new military strikes against Iran after appeals from countries in the region, including from Qatar's prime minister in White House talks.

"The market continues to prioritize President Trump's more conciliatory tone toward Iran since the midterms," said Tim Waterer, chief market analyst at KCM Trade.

In last week's US midterm elections, voters punished Trump's Republican Party for the rising cost of living fueled by his tariffs and higher energy costs from the war with Iran. Democratic candidates won solid majorities in both houses of Congress.

Attacks continued in the Middle East. The Saudi-led military coalition in Yemen said it shot down missiles fired by Yemen's Iran-backed Houthis at Saudi cities. The Houthis reported Saudi airstrikes hit the Yemeni capital Sanaa.

RUSSIA AND UKRAINE

Russian and Ukrainian officials met in Abu Dhabi for their first peace talks since February. Rubio described the US-brokered meeting as productive, without giving details. Still, the warring sides remain far apart on terms for a possible settlement, more than 4-1/2 years after Moscow invaded Ukraine.

Russia was the world's third-biggest crude oil producer behind the US and Saudi Arabia in 2025, US energy data showed. Post-invasion sanctions designed to keep Russian energy out of global markets have helped support oil prices, so any deal to end that war could allow Russia to export more.

US INTEREST RATES

US government data showed consumer prices increased by more than expected in October. Investors said this made it more likely the US Federal Reserve would raise interest rates half a percentage point at its December meeting.

A strong jobs market, resilient economic growth and inflation stuck above the Fed's 2% target for nearly six years all suggest further tightening is required.

When the Fed raises interest rates to fight inflation, the higher borrowing costs can reduce economic growth and slow demand for oil.

Higher prices for energy due to the war in the Middle East have already caused consumers around the world to reduce oil use.

In its latest outlook, the US Energy Information Administration projected that world petroleum consumption was on track to decline from a record 104.4 million barrels per day in 2025 to 102.4 million bpd in 2026.

(Reporting by Scott DiSavino in New York and Enes Tunagur in London; Additional Reporting by Seher Dareen in London, Sethuraman N R in New Delhi and Noel John in BengaluruEditing by David Goodman, Nia Williams and David Gregorio)