Brent Crude Falls Below $90: Will US Inflation Data and Fed Rate Bets Drive Oil Lower?

Brent crude has slipped below $90 for the first time since August, putting the recent oil rally under pressure as geopolitical risks begin to ease. US President Donald Trump’s decision to hold off on further strikes against Iran has raised hopes of reduced supply disruptions across the Middle East. However, the upcoming US inflation report could complicate the outlook by reshaping expectations for the Federal Reserve’s December rate decision. Can Brent extend its decline, or will renewed supply concerns bring buyers back?

Trump’s Iran Stance Triggers Sharp Decline in Oil Prices

Brent crude futures briefly dropped to $89.70 per barrel on November 10, breaking below the $90 threshold for the first time since August 31. The move followed a 5.85% decline in the previous session. By 0930 GMT, Brent had recovered slightly to around $90.18, while US West Texas Intermediate (WTI) traded near $84.74.

The latest sell-off followed Trump’s comments that additional military strikes against Iran were not necessary at this stage. After discussions with Qatar’s prime minister, the US president indicated that Washington would hold off on further military action for now, raising hopes of a possible de-escalation.

The shift has reduced the geopolitical risk premium that had supported crude prices during the conflict. However, the situation remains uncertain. Shipping disruptions and security threats around the Strait of Hormuz continue, leaving the market vulnerable to renewed supply concerns.

Oversupply Concerns Add Further Pressure on Brent Crude

Beyond geopolitical developments, rising production and concerns about weaker demand are creating additional headwinds for oil prices. According to estimates cited by JPMorgan, the global oil market recorded a surplus of approximately 1.4 million barrels per day in October. OPEC production also increased during the month, led by higher output from Saudi Arabia, Kuwait and Iraq.

This combination could make it harder for crude to recover if Middle East supply risks ease. With production increasing and demand facing pressure from elevated energy costs, the market could become more sensitive to signs of excess supply.

US CPI Data Puts Federal Reserve Rate Decision in Focus

The oil market is also approaching an important US economic event. The October Consumer Price Index (CPI), scheduled for release on November 10, is expected to show annual inflation rising to 3.9% from 3.7% in September. Core inflation is forecast to edge up to 2.7% from 2.6%.

Market expectations have shifted toward tighter monetary policy following stronger employment data and persistent inflation concerns. Futures markets were pricing in more than an 80% probability of a December rate hike ahead of the CPI release. A hotter-than-expected inflation reading could strengthen those expectations, while a softer report could ease pressure on the Fed.