By Georgina McCartney
LONDON, Nov 9 (Reuters) - Brent crude futures continued tumbling after settlement on Monday to lose more than $7 a barrel, hitting their lowest since late August, after US President Donald Trump downplayed the likelihood of renewed strikes on Iran.
Brent crude futures settled down $5.75, or 5.85%, at $92.57 a barrel. Prices continued falling after settlement, and were last down more than $7 a barrel.
US West Texas Intermediate futures settled down $3.98, or 4.38%, to $86.85. US crude
futures also continued falling, last down more than $5 in post-settlement trade.
The Brent benchmark plunged by 16% last week, its steepest weekly drop since the start of the COVID-19 pandemic.
On Sunday, Trump said he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed. Still, both countries reported that shipping had been hit in or near the Strait of Hormuz.
"This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down," TACenergy analysts said in a note.
Last week, Trump had hinted at a resumption of attacks on Iran and Tehran vowed to respond by striking US and Israeli targets. But there has been no sign of a large-scale US military operation.
A senior Iranian security official told the country's state media that Tehran has no plans to negotiate unless Washington takes practical steps to meet seven conditions set out in a June interim agreement.
Saudi Arabia's foreign minister and his Omani counterpart stressed in a phone call on Monday the need to press ahead with diplomatic efforts to contain the regional crisis and safeguard maritime security and sea lanes, Saudi state media reported.
On Monday, Trump will meet the prime minister of Qatar, which has been a mediator, though senior US and Gulf officials cast doubt on the chances of an imminent deal.
Iraq has reached understandings with the US to allow Iraqi oil exports through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said in an interview with Al Jazeera on Sunday.
"Crude futures are under selling pressure once again as oil volumes continue strong through the Strait of Hormuz," said Dennis Kissler, senior vice president of trading at BOK Financial.
In the Medina region, a fire was extinguished after Saudi Arabia's East-West pipeline was struck, an energy ministry source said, according to state media. There were no casualties and the pipeline's operations were not affected.
The Saudi-led coalition fighting Yemen's Iran-aligned Houthis said on Monday it destroyed a factory used by the group to make ballistic missile components and a chemical plant used for producing ballistic missile fuel, without specifying the locations of the targets.
The Houthis claimed responsibility for an attack on Sunday at Saudi oil giant Aramco's corporate office in the heart of the financial district of the capital Riyadh. Debris from the attempted attack blew out windows across several floors, the Saudi energy ministry said.
"Fresh tanker incidents and an attack on Saudi Aramco’s offices show that shipping and regional security risks remain unresolved as traders price in a less disruptive outcome," said Gelber & Associates.
Elsewhere, Russia and Ukraine are coming to US-brokered talks to end Moscow's war on Ukraine with good intentions, a US official said on Monday.
In a briefing ahead of Tuesday's talks in Abu Dhabi, a US official told reporters that both sides have shown a little bit of flexibility privately on territorial issues.
WELL-SUPPLIED PHYSICAL MARKET
Dated Brent, used to price cargoes around the world, has weakened to a discount to the nearby Brent futures contract, Morgan Stanley said in a report on Monday, highlighting weakness in the physical market.
The global oil market is showing signs of a return to excess supply as demand drops because of high prices, some analysts said. The global oil surplus is estimated at around 1.4 million barrels per day in October, JPMorgan said in a report last week.
OPEC oil output rose in October, a Reuters survey found, led by gains in Saudi Arabia, Kuwait and Iraq despite continued constraints on exports.
Crude output from the 11-member Organization of the Petroleum Exporting Countries rose by 1.38 million bpd from the previous month to 22.87 million bpd, the survey found.
US crude oil and product stockpiles were expected to have fallen last week, a preliminary Reuters poll showed on Monday.
Stocks of crude oil in the US Strategic Petroleum Reserve fell to 279.5 million barrels last week, the lowest level since October 1982, according to data from the Department of Energy.
(Reporting by Georgina McCartney in Houston, Enes Tunagur and Alex Lawler in LondonAdditional reporting by Helen Clark and Sethuraman N REditing by David Goodman, Emelia Sithole-Matarise, David Gregorio and Nia Williams)
