Oil Drops 4% as Iran Talks Raise Deal Hopes

SEATTLE (Oil Monster): Oil prices fell more than 4% on Monday as Qatar-mediated talks involving Iran raised hopes that an agreement could ease Middle East supply disruptions.

Oil Prices Slide on Renewed Diplomatic Hopes

Oil fell more than 4% on Monday as talks between Iranian and Qatari officials on a deal to end the U.S.-Israeli war on Iran raised hopes that Middle East supply disruptions could ease.

Iranian negotiators have left talks with Qatari mediators aimed at ending the war with the United States, and a draft proposal is being circulated with a follow-up meeting possible, an official briefed on the talks said Monday.

“The new month brought with it renewed hopes of a breakthrough in the Iranian stalemate,” said Tamas Varga of oil broker PVM.

Brent Falls Below $109

Brent crude futures fell $4.79, or 4.2%, to $108.64 a barrel by 1020 GMT, while U.S. West Texas Intermediate crude traded at $99.71, down $4.41, or 4.2%.

Brent ended October at its highest level in six months amid concerns that the U.S.-Iran conflict could escalate again after Tuesday’s U.S. midterm elections.

“Lingering hopes of some form of diplomatic progress, combined with the absence of any meaningful military escalation over the weekend, have taken some of the immediate heat out of prices for now,” said Tim Waterer, chief market analyst at KCM Trade.

Qatar-Mediated Talks Continue

Iranian Foreign Minister Abbas Araqchi said Sunday that the purpose of the “ongoing and progressing” talks was to continue consultations with Qatari mediators, adding that Tehran was prepared for “both defence and diplomacy.”

The talks follow a recent increase in attacks on oil tankers transiting the Strait of Hormuz, although there are also signs of shipments rising from some major exporters.

Saudi Crude Exports Rise Despite Attacks

Saudi Arabia increased crude exports in October compared with September despite attacks by the Iran-aligned Yemeni Houthis on its energy infrastructure, according to two of three ship-tracking companies.

The conflict that began at the end of February has also drawn down global oil inventories. The world has drained nearly 1 billion barrels from inventories since the war disrupted shipping through the Strait of Hormuz, according to the CEO of Abu Dhabi’s state-owned oil company ADNOC.

Goldman Sees Continued Upside Risk

Oil prices could still move higher if supply disruptions persist.

Goldman Sachs raised its oil price forecasts on Sunday because of elevated supply risks and said Brent could rise to $140 a barrel in 2027 if Gulf oil output remains 3.5 million barrels per day below its 2025 average.

“Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside,” the bank said in a report.

Also Read: Oil Prices Reverse Gains as Gulf Exports Recover

Courtesy: www.reuters.com