Brent crude slides 5% as hopes rise for a diplomatic end to U.S.-Iran war
Oil extends its slide after its biggest weekly drop since 2020
Trump said renewed strikes on Iran were unlikely, though that would depend on the terms of any deal / Photo: The White House
Brent crude fell around 5% in Monday trading, touching $93.50 a barrel. West Texas Intermediate, the U.S. benchmark, fell as much as 4.4% to $90.83 a barrel. Oil extended its slide after posting its biggest weekly drop since April 2020 last week, Bloomberg reports. Crude was still at a six-month high in October.
Oil prices are falling as hopes grow for a diplomatic resolution to the war in the Middle East even as fighting continues, writes Bloomberg. Those hopes strengthened after Democrats swept the U.S. midterm elections, securing majorities in both chambers of Congress. Bloomberg said the outcome should give the White House more incentive to find a way out of the conflict.
U.S. President Trump told CNN over the weekend that renewed attacks on Iran were “highly unlikely,” though he said that would depend on Tehran’s willingness to sign a “very strong agreement.” It remains unclear whether the more conciliatory tone will translate into progress, Bloomberg notes.
Oil prices also fell after the daily Israel Hayom reported that Iran may have dropped its demand to control the Strait of Hormuz and charge ships transit fees. Bloomberg was unable to confirm the report.
“The oil market appears to be in a calm-before-the-storm phase, with the outlook for prices looking increasingly binary over the coming weeks,” said Helge Andre Martinsen, a senior energy analyst at DNB Carnegie. A diplomatic breakthrough “could send oil prices sharply lower. Conversely, a return to kinetic warfare could drive prices significantly higher.”
Trump is scheduled to meet Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani at the White House on Monday. Qatar is one of the key mediators between the U.S. and Iran and is working through diplomatic channels to prevent the conflict from escalating. Traders will closely watch for news from Washington, writes Bloomberg.
Traders are also awaiting monthly reports on global supply and demand from the three major oil market forecasters this week. The U.S. Energy Information Administration reports on Tuesday, OPEC on Wednesday, and the International Energy Agency on Friday, Bloomberg added.
