Oil drops 7pc as Iran signals openness to talks

Oil prices tumbled by more than 7 percent on Monday as Iranian and Qatari officials held talks that sparked optimism about resolving the US-Israeli conflict and stabilizing Middle East crude supplies. 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, according to analysts who cited hopes for a diplomatic breakthrough following Iranian President Masoud Pezeshkian's statement that Supreme Leader Ayatollah Khamenei had granted the government authority for peace negotiations. Pezeshkian added that Tehran would "try to resolve the problem with dialogue" without providing further details.

Iranian negotiators engaged in days of discussions with Qatari mediators to end the war. Brent's price reached its highest level in six months in October due to concerns about the Middle East conflict potentially escalating again after the US midterm elections. US President Trump claimed on Monday that Iran desires an agreement to end the war.

On Monday evening, Qatari mediators met with Iranian Foreign Minister Abbas Araqchi to discuss a potential US-Iran deal. The positive outlook on oil prices was tempered by the fact that the oil market remains highly sensitive to any Middle East headlines. Analysts UBS's Giovanni Staunovo noted that although fears of an imminent escalation had driven prices up last week, they had plummeted at the start of this week as diplomatic talks continued.

The talks followed an increase in attacks on oil tankers near the Strait of Hormuz, though there were also indications of rising shipments from major exporters. Saudi Arabia's crude exports rose in October compared to September, according to two of three ship-tracking companies, despite attacks by Iran-aligned Yemeni Houthis on its energy infrastructure.

The Iran war that began at the end of February had significantly depleted global oil stocks, with the world having reduced inventories by nearly 1 billion barrels since the conflict disrupted shipping through the Strait of Hormuz, said ADNOC CEO Sultan Al Jaber. Oil prices could potentially rise further, some analysts suggested, citing elevated supply and the risk of continued attacks on oil infrastructure as key factors for a potential upside.