Oil market heads for longest Brent losing streak in over a year

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Brent oil losing streak

Highlights

Brent crude drops 0.8 per cent to $98.43 a barrel on Wednesday, heading for its sixth consecutive daily loss, the longest streak since August last year.
Saudi Arabia prepares to restart its East-West pipeline amid the first U.S.-Iran talks since June, signaling potential relief to geopolitical supply risks impacting prices.
Goldman Sachs sees China unlikely to boost oil imports in Q4, with upside risks to crude mainly from potential escalation of strikes on Middle East infrastructure.

Diplomacy and supply signals weigh on crude

As reported by Financial Times, Brent crude falls 0.8 per cent in afternoon trading in Asia on Wednesday to $98.43 a barrel, putting the global benchmark on track for a sixth straight daily decline. If sustained, that marks the longest losing streak for Brent since August last year, while U.S. oil prices trade below $90 a barrel after losing more than 10 per cent over the past five days.

Prices also dip after Saudi Arabia signals that it is preparing to restart its East-West pipeline and resume crude exports from its Red Sea coast. The market is also watching the first U.S.-Iran talks since June, a development that suggests a possible easing in one of the main geopolitical risks driving energy prices.

The decline comes as U.S. President Donald Trump prepares to host Chinese leader Xi Jinping in Washington for a three-day summit. Analysts expect the meeting to preserve a fragile truce between the two powers, but they do not expect a major breakthrough in trade, technology or broader geopolitical tensions.

Lower oil offers relief, but risks remain

Easing crude prices help push U.S. stock markets to fresh highs this week, with optimism over AI developments lifting the Nasdaq 100 to a new record on Tuesday. Global bond markets are steadier on Wednesday, with the yield on the 10-year U.S. Treasury edging up 0.01 percentage points to 4.96 per cent.

Kenny Ng, a strategist at Everbright Securities International, says the summit outcome will shape U.S.-China economic and trade relations, technology competition and the wider geopolitical backdrop. Grace Tam, deputy chief investment officer for Asia at BNP Paribas Wealth Management, says the drop in oil prices only slightly lowers expectations for a Federal Reserve rate rise in October, to a 53 per cent probability.

Analysts at Goldman Sachs say China is unlikely to substantially increase oil imports in the final three months of the year, with Beijing instead drawing on its strategic reserves. They say the main upside risk to crude prices remains any escalation of strikes on Middle East production and export infrastructure, rather than a rebound in Chinese buying.

Higher energy prices continue to feed inflation concerns, even with this week's retreat in crude. Chicago Federal Reserve President Austan Goolsbee warns this week that the U.S. central bank would need an aggressive and frontloaded response if inflation proves to be driven by more lasting forces than an oil price shock.

In our earlier coverage of the oil sell-off tied to U.S.-Iran diplomatic talks, we explained how signs of de-escalation helped ease fears of Middle East supply disruptions and pushed Brent back below $100 a barrel. We also noted that both Brent and WTI were down around 10% over five sessions, weighing on energy shares and becoming a key factor shaping broader market sentiment.

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