Oil drops 7% as Iran signals openness to peace talks

Oil prices plummeted over 7 percent on Monday (Nov 2) as Iranian and Qatari officials discussed the possibility of peace talks, reducing concerns about a prolonged US-Israeli war with Iran and stabilizing Middle East crude supply. Brent crude futures fell 7.63 percent to $104.77 a barrel, while US West Texas Intermediate crude dropped 7.36 percent to $96.46.

The lowest point for Brent was $103.28, and for WTI, it was $95.15. Iranian President Masoud Pezeshkian stated that Supreme Leader Ayatollah Mohajtaba Khamenei had granted the government authority for peace negotiations, and Iran would attempt to resolve the conflict through dialogue. Analysts were optimistic about a diplomatic breakthrough, despite past false dawns.

US President Donald Trump confirmed on Monday that Iran aimed to end the war, potentially paving the way for a deal. Qatari mediators visited Teheran for talks with Iranian Foreign Minister Abbas Araqchi on a possible US-Iran agreement. This optimism in the Middle East talks led to a sharp drop in oil prices, according to Raymond James analyst Pavel Molchanov.

However, skepticism remains as the market is often overly sensitive to Middle East headlines. Brent ended October at its highest in six months due to concerns about the conflict escalating post-US midterm elections. Despite recent attacks on oil tankers in the Strait of Hormuz, some exporters are increasing shipments. Saudi Arabia's crude exports rose in October compared to September, according to two of three ship-tracking companies, even with Iranian Houthi attacks on its energy infrastructure.

The prolonged Iran war depleted oil stocks, with the world reducing nearly 1 billion barrels from inventories since the conflict disrupted shipping through the Strait of Hormuz. Analysts anticipate potential price increases if Gulf oil output remains below its 2025 average.