Oil prices fell sharply on today, as signals from the United States and Iran that they were willing to give diplomacy another chance eased concerns about further escalation in the Middle East and the potential disruption of global crude supplies.
As at the time of writing 06:40 pm (WAT) Brent crude dropped 7.53% to $104.90 per barrel, while US West Texas Intermediate (WTI) fell 7.25% to $96.57, according to the latest market data provided by Oilprice.com.
The decline followed comments by Iranian President Masoud Pezeshkian, who said the country's Supreme Leader had granted the government certain authorities to pursue peace negotiations. Pezeshkian added that Tehran would seek to resolve the conflict through dialogue, according to Iranian state media.
Iranian Foreign Minister Abbas Araghchi also said negotiators in Qatar were working on a proposal that could reopen the Strait of Hormuz within two days, provided Washington meets a series of conditions. Tehran has demanded an end to the US naval blockade of its ports, the lifting of oil sanctions and a halt to fighting across regional fronts. Araghchi, however, maintained that Iran was not holding direct talks with the United States.
On the US side, Secretary of State Marco Rubio said no decision had been made on further military strikes, adding that President Donald Trump preferred a diplomatic resolution. Trump has also indicated that he wants to give negotiations more time, despite pressure from Israeli Prime Minister Benjamin Netanyahu to resume strikes after Tuesday's midterm elections.
The latest decline represents a retreat from the geopolitical risk premium that had pushed Brent crude towards $118 per barrel in October. Goldman Sachs estimates that approximately $27 per barrel of the rally was attributable to geopolitical risks. The investment bank has raised its December Brent forecast to $105 from $90 and expects the benchmark to average $88 per barrel in 2027.
However, uncertainty over the Strait of Hormuz continues to pose a threat to the market outlook. The UK Maritime Trade Operations centre reported that a projectile struck a vessel in the strait on Sunday, days after a tanker fire in the waterway helped push Brent towards $117 per barrel. The Houthis also claimed fresh attacks on Saudi Arabia's Ras Tanura and Rabigh refineries and an Aramco facility at Abqaiq, although Riyadh has not confirmed the reported strikes.
Meanwhile, seven OPEC+ members, including Saudi Arabia and Russia, agreed on Sunday to maintain their December production targets, leaving planned output levels unchanged. The combination of diplomatic signals and persistent security risks means that crude prices remain sensitive to developments around the conflict and the security of shipments through the Strait of Hormuz.