Why Are Crude Oil Prices Falling? Five Key Reasons Brent Has Slipped Below $95

Global crude oil prices fell for a fourth consecutive trading session on Thursday, 5 November 2026, extending a steep sell-off earlier in the week. Brent crude futures were trading at $93.82 a barrel at 9:56 am Indian Standard Time, down 0.85% from Wednesday's close. The fall has been unusually sharp. On Wednesday, 4 November, Brent settled at $94.62 after dropping 8.7%. The benchmark recorded its lowest settlements since 31 August. Brent had lost roughly 16% to 17% during the week by Thursday morning. The main shift has been in expectations about future oil supplies, not a sudden collapse in daily consumption.

Here are the key reasons for the sharp fall in crude oil prices

1. US Election Results Raise Hopes of an Iran Deal

The immediate trigger has been the result of the US midterm elections. Democrats won control of both chambers of Congress, dealing a political setback to President Donald Trump's Republican Party. Markets interpreted the result as increasing pressure on the administration to seek a negotiated end to the US and Israeli war with Iran, rather than pursue further military escalation. A possible reduction in the conflict's intensity would lower the risk of fresh disruptions to oil production and shipping.

Political pressure, however, is not the same as an agreement. Congress may influence future funding and policy, but the election result does not automatically end the conflict or remove the President's foreign policy powers. Crude prices are reacting to a change in the perceived probability of a settlement. That distinction matters because a deterioration in diplomatic talks could quickly reverse the current market sentiment.

2. The Geopolitical Risk Premium Is Easing

Oil traders often pay more for crude when there is a serious risk that an important producing region might lose supply. This additional amount is commonly described as a geopolitical risk premium. The fighting involving Iran had pushed energy prices higher as investors worried about attacks on oil facilities and disruptions around the Strait of Hormuz, one of the world's most important routes for crude shipments.

Recent signals that Washington may avoid immediate additional strikes have reduced some of those fears. Traders are therefore removing part of the premium built into earlier prices. This explains why crude can fall dramatically even before there is a signed peace agreement. The market is adjusting what it is willing to pay for the possibility of future shortages. It does not mean that the underlying conflict or its economic consequences have disappeared.

3. Oil Shipments from the Persian Gulf Are Recovering

Physical supply has also improved. According to the International Energy Agency (IEA), global oil production rose by 2.5 million barrels a day in September to 102.3 million barrels a day, largely because output from Gulf producers recovered. According to the report, Gulf crude exports increased by 4.4 million barrels a day to 13.9 million barrels a day in September, regaining more than three-quarters of their levels before the war.

More recent market reporting indicates that crude shipments through the Strait of Hormuz have moved closer to their earlier levels, although shipping remains more expensive. When buyers expect more barrels to reach refiners, the fear of an immediate shortage weakens. This return of supplies is an important reason oil prices are falling. It remains a fragile recovery because any further attacks on tankers, pipelines or export terminals could interrupt flows again.

4. Global Oil Demand Is Under Pressure

Oil demand has been weakened by the same elevated energy prices that previously supported crude. In its report published on 14 October, the IEA forecast that worldwide demand would decline by an average of 2.6 million barrels a day in 2026 compared with 2025. The agency expected a fall of 2.5 million barrels a day in the fourth quarter alone. Higher fuel costs, disrupted supplies of refined products and a weaker economic outlook were central reasons behind that assessment.

Demand pressure is particularly visible in transport fuels and industrial uses of energy. Expensive diesel increases the cost of moving goods, while high prices for petrochemical inputs can reduce factory activity. Some consumers and businesses respond by reducing consumption or postponing purchases. These changes take time, but weaker demand forecasts reduce the quantity of oil buyers are expected to require in the months ahead. A softer demand outlook therefore adds to the downward pressure from improving supply.

5. More Available Supply Is Changing the Market Balance

The return of Gulf exports matters even more when global demand is struggling. With additional crude available, traders are beginning to reassess the risk of shortages that dominated the market earlier in the year. Supply from the Persian Gulf is exceeding near-term demand in its 5 November market commentary. That helps explain why the prices of oil futures have reacted so strongly to relatively encouraging diplomatic signals.

The IEA's October report still warned that global oil inventories had fallen sharply since the war began and that the balance could remain tight without a lasting recovery in supplies. Different market estimates can also reach different conclusions because of the timing and coverage of available data. The important change is that expectations have moved away from an ever-worsening shortage towards the possibility of a better supplied market.

How Lower Crude Prices Could Affect India

India relies heavily on imported crude oil, so lower international prices can ease the foreign currency cost of purchasing petroleum. If the decline lasts, it may reduce pressure on the country's import bill and provide some relief to inflation-sensitive industries such as airlines, transport, paints and chemicals. A lower oil bill can also reduce one source of demand for US dollars, although the overall effect on the rupee depends on capital flows and other factors.

The benefit is neither immediate nor automatic. Domestic petrol and diesel prices depend on refinery costs, taxes, retail pricing decisions and the exchange rate, not only on Brent futures. A short-lived drop in global crude does not guarantee lower fuel prices at the pump. Nor should investors assume that every company benefits equally: oil producers may face weaker selling prices, while fuel users could see lower costs only after existing inventories and contracts are worked through.

Conclusion

Crude oil prices have fallen sharply on 5 November mainly because traders see a better chance of reduced tensions with Iran following the US midterm elections. More oil has started moving out of the Persian Gulf, while weak global demand forecasts make additional supply more significant. Together, these factors have encouraged the market to unwind part of the geopolitical premium that previously pushed crude higher.

The decline does not mean oil supplies are secure or that prices must keep falling. US stockpiles remain below normal, refined fuel markets are tight, and the political situation is unresolved. For now, Brent below $95 reflects a rapid reassessment of near-term risk. Whether that becomes a lasting trend will depend on diplomacy, actual supply flows and the strength of global fuel demand.