Oil prices fell more than 4% on Monday, November 2, as hopes of a possible peace deal between the United States and Iran reduced fears of further disruptions to oil supplies from the Middle East. Investors reacted to reports of diplomatic talks between Iranian and Qatari officials aimed at ending the ongoing US-Israeli war on Iran.
Brent crude futures dropped by $4.79, or 4.2%, to $108.64 per barrel by 1020 GMT on Monday. US West Texas Intermediate (WTI) crude also fell by $4.41, or 4.2%, to $99.71 per barrel. Nearly 1 billion barrels of oil have been taken out of worldwide stockpiles since the war disrupted shipments through the Strait of Hormuz. The bank warned that Brent crude could reach $140 per barrel in 2027 if oil production in the Gulf region remains 3.5 million barrels per day below its 2025 average.
Two out of three ship-tracking companies reported the increase. Iranian negotiators have held talks with Qatari mediators to discuss ways to end the war involving the United States . The Iranian negotiators have now left the discussions, while a draft proposal is being circulated. Brent crude ended October at its highest level in six months. These concerns had raised fears of further disruptions to oil supplies. Hopes of diplomatic progress and the absence of any major military escalation over the weekend have reduced some of the immediate pressure on oil prices. The peace discussions come after a recent increase in attacks on oil tankers travelling through the Strait of Hormuz. The waterway is an important route for global oil shipments. Any disruption to shipping through the strait can affect the amount of oil reaching international markets and push prices higher. There are also signs that oil shipments from some major producers are increasing. Saudi Arabia exported more crude oil in October than in September, despite attacks by Iran-aligned Yemeni Houthi forces on its energy infrastructure. The Iran war has reduced global oil inventories.
Because any progress towards ending the conflict could help restore the flow of oil from the Middle East, oil market investors are watching the talks closely. Because investors feared that the conflict between the United States and Iran could become more serious after Tuesday’s US midterm elections, prices had increased. Because of continuing supply risks, despite Monday’s fall, some analysts believe oil prices could increase further.
“The new month brought with it renewed hopes of a breakthrough in the Iranian stalemate,” said Tamas Varga of oil broker PVM, according to Reuters. “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, according to Reuters. He said the purpose of the discussions was to continue consultations with Qatar. Araqchi also said Tehran was prepared for “both defence and diplomacy”, according to Reuters. This was disclosed by the chief executive of Abu Dhabi’s state-owned oil company ADNOC, according to Reuters. Goldman Sachs said further attacks on shipping, damage to oil infrastructure and continued fears of supply disruptions could increase oil prices. These risks could keep an additional premium in oil prices even if diplomatic talks continue, according to Reuters.
Another meeting could take place to continue the discussions, an official familiar with the talks said on Monday. Iranian Foreign Minister Abbas Araqchi said on Sunday that talks with Qatari mediators were continuing and making progress. Goldman Sachs raised its oil price forecasts on Sunday.
