Brent oil price benchmark set for biggest weekly drop since 2020

By Shadia Nasralla

LONDON, Nov 6 (Reuters) - Oil prices were set for a sharp weekly fall after the election losses of US President Donald Trump's Republican Party raised hopes of a de-escalation in the US-Israeli war on Iran and a stock market sell-off, though attacks on vessels in the Middle East continue to provide a floor to crude.

In a whiplash see-saw session on Friday, Brent crude futures for January were up 26 cents, or 0.3%, at $98.55 a barrel by 1346 GMT. US West Texas Intermediate futures edged up by 57 cents, or 0.6%, to $91.09. 

The Brent contract is on track for a 16% decline this week, which would be its steepest weekly percentage fall since the start of the COVID-19 pandemic and its biggest in absolute terms in LSEG data going back to 1988.

WTI is set for a 13% decline.

The oil price slide comes against the backdrop of a dramatic rout in technology stocks. [MKTS/GLOB]

A potential Iran war de-escalation could lead to more crude exports out of the region. Signs of an emerging supply excess amid demand destruction were reinforced by spot premiums for Middle Eastern crude benchmarks returning to levels reached before the conflict.

“The crude market is loosening to a state of oversupply based on the balance, but the quality difference still exists as refiners recover what they can take versus what is available," said Rystad oil market analyst Janiv Shah, pointing to longer voyages and the need for ship-to-ship transfers as workarounds near Hormuz.

"The market is still looking for evidence of a firm deal being signed (on Iran), or any backlash from either party could tighten fundamentals once more.”

Oil prices fell 8% on Wednesday alone after the Democrats swept the US midterm elections, settling at two-month lows.

However, prices rebounded on a surge in tanker attacks in the Gulf and the Strait of Hormuz, renewing concerns over supply flows from the region. 

A Greek ship manager said on Friday that a seafarer was killed in a November 5 explosion on an oil products tanker in the Gulf, believed to have been caused by a missile attack.

Data from Britain's maritime security agency UKMTO suggested that attacks on oil-carrying ships are still running at close to record pace.

"Oil doesn't have to be at $117 to be expensive, and a fall to $93 doesn't mean the underlying problems have disappeared," said Matt Stanley from tanker trackers and energy flow analysts Kpler.

"After over 25 years in this business, I honestly can't recall many weeks quite like this one."

(Reporting by Shadia NasrallaAdditional reporting by Colleen Howe, Helen Clark and Seher DareenEditing by David Goodman)