Key Moments
- Brent crude dropped $3.43, or 3%, to $110 a barrel, while US WTI declined $3.50, or 3.4%, to $100.62 a barrel by 0712 GMT.
- Iranian and Qatari officials entered a third consecutive day of talks aimed at securing a deal to end the US-Israeli war on Iran.
- OPEC+ left its December production targets unchanged as the group continued to grapple with export disruptions linked to the Iran war.
Market Overview
Oil futures fell more than 3% on Monday in Asia as traders reacted to continued diplomatic discussions between Iranian and Qatari officials, which raised hopes for progress toward ending the US-Israeli war on Iran.
By 0712 GMT, Brent crude futures were lower by $3.43, or 3%, at $110 a barrel. US West Texas Intermediate (WTI) crude traded at $100.62 a barrel, a decline of $3.50, or 3.4%.
Brent had finished October at its highest level in six months, supported by concerns that the US-Iran conflict could intensify following Tuesday’s US midterm elections.
Price Action Snapshot
| Contract | Price | Move | Percent Change | Time |
|---|---|---|---|---|
| Brent crude futures | $110.00 | -$3.43 | -3% | 0712 GMT |
| US WTI crude | $100.62 | -$3.50 | -3.4% | 0712 GMT |
Technical Pullback and Diplomatic Hopes
Analysts described Monday’s decline as a retreat following strong gains in the prior week. Tim Waterer, chief market analyst at KCM Trade, said, “Oil is seeing a technical pullback this morning after last week’s strong gains.”
He added, “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.”
Iranian Foreign Minister Abbas Araqchi said on Sunday that the goal of the “ongoing and progressing” talks was to sustain consultations with Qatari mediators, and stated that Tehran was ready for “both defence and diplomacy”.
Geopolitical Risks and Supply Routes
The discussions were taking place against a backdrop of attacks on oil tankers passing through the Strait of Hormuz, which have been pushing up global energy and shipping costs.
Despite these disruptions, Saudi Arabia increased crude exports in October compared with September, according to two of three ship-tracking companies, even as its energy infrastructure faced attacks from Iran-aligned Yemeni Houthi forces.
Analyst Views on Price Ceiling
Some market participants see limited room for prices to move substantially higher from current levels. They argue that the risk of further tensions in the Middle East through year-end has already been reflected in crude benchmarks and that any upside may be constrained near $120 a barrel.
DBS Bank’s head of energy research Suvro Sarkar said, “Prices have already priced in escalation of US-Israel response in the aftermath of the midterms, so we don’t expect the market to be surprised if attacks on Iran resume over the next two weeks.”
He continued, “As crude largely keeps flowing through the Strait and bypass routes at close to 80% of pre-war levels, we think market reactions will be capped around USD120/bbl on news of significant strikes before normalising again.”
OPEC+ Keeps Output Targets Unchanged
The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, maintained its December production targets on Sunday. The decision aligned with expectations that the group would refrain from making further policy changes until next year.
The alliance continued to face challenges from export disruptions related to the Iran war as it held its output strategy steady.
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