Oil prices fell by about 3% on Monday as Iranian and Qatari officials held a third consecutive day of talks aimed at ending the US-Israeli war on Iran. The slide pulled crude back from a six-month high and handed markets a measure of relief, though few traders believe the risks have gone away.
Prices retreat from a six-month high
Brent crude futures fell $3.68, or 3.2%, to $109.75 a barrel, while US West Texas Intermediate dropped $3.43, or 3.3%, to $100.69. Brent had ended October at its highest level in six months, as traders worried about escalation after the US midterm elections.
Part of the pullback reflects what did not happen. An analyst quoted by one outlet said lingering hopes of diplomatic progress, together with the lack of any meaningful military escalation over the weekend, had taken some heat out of prices for now.
Diplomacy gathers pace
Iran’s foreign minister, Abbas Araqchi, described the talks as continued consultations with Qatari mediators and said Tehran was ready for both defence and diplomacy. One report said Iranian negotiators in Qatar were discussing a proposal that could reopen the Strait of Hormuz within two days. The same report said Tehran would require several conditions to be met and that no direct talks were under way with Washington.
From the American side, the tone also softened. Secretary of State Marco Rubio said President Donald Trump was inclined toward a peaceful resolution rather than military action.
Hormuz remains the pressure point
Even with talks moving ahead, the physical risks to supply are real. Attacks on oil tankers transiting the Strait of Hormuz have pushed up global energy and shipping costs. The waterway carries a large share of the world’s seaborne oil, so any prolonged disruption quickly shows up at the pump and in freight bills.
Producers are not rushing to fill the gap. OPEC+ kept its December production targets unchanged on Sunday, and Saudi Arabia raised crude exports in October compared with September despite attacks on its energy infrastructure. PVM Oil Associates analyst Tamas Varga argued that attacks on ships and civilian targets, in both the Middle East and Ukraine, were working against lasting ceasefires.
The midterms loom
Markets are now looking toward Tuesday’s US elections. One analyst warned that tougher rhetoric on Iran after the vote could push Brent toward $120. ING analysts said the market would judge whether the geopolitical risk premium stays high or gradually fades once the elections are over.
Why it matters beyond the oil patch
The drop in crude had an immediate effect on other markets. Indian equities rallied sharply on Monday, with analysts pointing to lower Brent prices, which slipped to around $110, and a fall in the US 10-year Treasury yield to 4.93%.
For central banks, the stakes are high. With crude trading above $100 a barrel, US inflation has stayed above the Federal Reserve’s 2% target for 67 consecutive months. Cheaper oil would ease some of that pressure, while a renewed spike would make life harder for policymakers already weighing further rate increases.
What to watch next
Three things will shape the next phase: whether the Qatar-led talks produce a concrete plan for Hormuz, whether tanker attacks continue, and how the political landscape in Washington shifts after Tuesday. For now, the oil market is trading hope against risk. A deal could push prices lower quickly, but a breakdown could send them sharply higher, and traders are positioned for either outcome.
Summary: Brent crude fell about 3% to near $110 on Monday as Iran and Qatar held a third day of talks on ending the war. Hormuz tanker attacks and the US midterms remain the main risks.
