Oil prices moved lower on Monday as ongoing talks in Doha between Iranian negotiators and Qatari mediators appeared to temper near-term supply risk premiums tied to the conflict in the region. By 0900 GMT Brent crude futures had dropped $4.20, or 3.7%, to $109.23 a barrel, while U.S. West Texas Intermediate traded at $100.14, down $3.98, or 3.8%.
Market participants cited the continuation of consultations as a factor that eased some of the immediate pressure on prices. "The new month brought with it renewed hopes of a breakthrough in the Iranian stalemate," said Tamas Varga of oil broker PVM, reflecting how expectations around diplomacy can shift short-term sentiment in oil markets.
Iranian negotiators departed Doha on Sunday, but an official briefed on the meeting told Reuters on Monday that their departure was not due to difficulties in the negotiations. Iranian Foreign Minister Abbas Araqchi described the discussions as "ongoing and progressing," and said the purpose was to continue consultations with the Qatari mediators, adding that Tehran was prepared for "both defence and diplomacy."
Analysts also noted the lack of significant military escalation over the weekend as a factor that pulled some of the immediate "heat" out of prices. "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," said Tim Waterer, chief market analyst at KCM Trade.
Still, observers caution that upside risks remain. The outbreak of the Iran war at the end of February has coincided with a substantial drawdown in global inventories. The chief executive of Abu Dhabi’s state-owned oil company ADNOC said the world has drawn almost 1 billion barrels from inventories since the war disrupted shipping through the Strait of Hormuz.
Attacks on vessels in the Strait of Hormuz have increased recently, and those security concerns remain a key element underpinning elevated risk premia in oil. The talks in Doha follow that recent surge in attacks on oil tankers, although there are also signs that shipments have risen from some major exporters.
Data from ship-tracking firms showed that Saudi Arabia increased crude exports in October compared with September, despite attacks by the Iran-aligned Yemeni Houthis on the kingdom's energy infrastructure, according to two of three ship-tracking companies referenced in market reports.
Looking further ahead, some investment banks see the potential for much higher prices if supply constraints persist. Goldman Sachs raised its oil price forecasts and warned that Brent could reach $140 in 2027 if Gulf oil output remains 3.5 million barrels per day below its 2025 average. The bank highlighted that "intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside."
For now, a mix of diplomatic movement and an absence of fresh large-scale military incidents appear to have been sufficient to prompt a near-term sell-off in futures. But the interplay between geopolitical developments, physical shipping security, and exporters' flows will likely continue to drive volatility in crude markets.
Key points
- Brent fell to $109.23 and WTI to $100.14 as diplomatic talks between Iran and Qatar raised hopes of reduced Middle East supply disruptions.
- Officials described the Doha consultations as "ongoing and progressing," with Iranian negotiators leaving the talks on Sunday not because of difficulties, according to a briefing.
- Supply-side stress remains a live risk - inventories have fallen nearly 1 billion barrels since the war disrupted shipping through the Strait of Hormuz, and some analysts see the potential for much higher prices if Gulf output stays materially lower.
Risks and uncertainties
- Renewed or intensified attacks on shipping could lift the market risk premium and push prices higher - impacting the energy, shipping and insurance sectors.
- Damage to oil infrastructure from attacks could reduce physical flows, creating further price pressure and affecting refining and downstream fuel markets.
- Diplomatic talks remain in progress - their outcome is uncertain and markets may reprice quickly if negotiations stall or military tensions escalate, with ripple effects across commodity and financial markets.