Oil Falls 3.3% After Trump Says US Military Aid to Israel Will End This Year

Brent crude futures were down $3.45, or 3.3%, at $101.32 a barrel at 13:50 GMT, according to Al Bayan. Earlier in the session the benchmark had traded above $107. The paper said it was Brent's lowest level since October 8. US West Texas Intermediate fell $2.16, or 2.2%, to $94.30 a barrel after touching its lowest level since October 15.

The drop followed a fall of more than 7% in both benchmarks on Monday. Hopes for a settlement had grown after Iranian and Qatari officials held talks.

What Trump Said

In a phone interview with Fox News' Fox and Friends, Trump said he and Israeli Prime Minister Benjamin Netanyahu had agreed to end $4 billion in annual US funding to Israel after this year. "We've already agreed that by the end of this year we won't be paying Israel," he said, according to France 24, adding: "Now we'll help Israel if they need it."

The details of the commitment are unclear. Under the current memorandum of understanding, the US provides $3.8 billion a year in military aid to Israel, and that agreement runs to 2028. France 24 reported that it was not immediately clear which funding Trump was referring to, and Netanyahu's office did not comment immediately. In May, Netanyahu told CBS he hoped to wean Israel off US military support within a decade.

A Volatile Session

Prices had risen earlier on Tuesday. An Iranian official said Tehran and Washington were still far from an agreement to end the war, and the US struck Iran's Qeshm Island in the Strait of Hormuz, renewing worries about the security of oil supply. Qatar's foreign ministry spokesman said both the United States and Iran remain committed to mediation and are reviewing proposals to narrow their differences, and pointed to progress in the talks.

In a note quoted by Al Bayan, ING said signs of progress in peace talks could push prices lower still, but warned that it was too early to assume the risk of escalation had passed.

The moves came as polls opened in the US midterm elections, in which the Iran war and high fuel prices are among voters' concerns. Brent ended October at a six-month high, supported by fears of renewed escalation after the vote.

Elsewhere, the governor of Russia's Yaroslavl region said a Ukrainian drone attack had damaged an oil refinery. Russia's defence ministry said it had carried out large-scale overnight strikes on energy facilities in several Ukrainian regions. Abu Dhabi is due to host talks between delegations from the United States, Ukraine and Russia on November 10 and 11.

Why It Matters for the Gulf

For Gulf producers and importers, the swing from above $107 to about $101 in a single session shows how far prices still depend on news from the Iran conflict and the Strait of Hormuz, rather than on supply and demand. Brent remains above $100 even after two days of losses, and with the US-Iran talks unresolved and the aid announcement short on detail, traders have little reason to expect stable prices soon.