Brent falls 7.7% to $104.66 on hopes for Iran talks
Brent fell 7.7% to $104.66 a barrel and WTI dropped 7.3% to $96.50 after Washington and Tehran signalled the dispute could be resolved through dialogue.
Oil prices fell more than 7% on Monday after signals from US President Donald Trump and Iranian President Masoud Pezeshkian that they were open to a diplomatic solution to the conflict that has roiled energy markets for eight months.
Brent crude futures, the international benchmark, fell 7.7% to $104.66 a barrel as of 12:11 p.m. ET, while West Texas Intermediate dropped 7.3% to $96.50 a barrel. Brent had slipped to $112.60 by 6:30 a.m. from $115.86 the previous morning.
US Secretary of State Marco Rubio said Trump prefers not to use force and wants a diplomatic solution to the conflict, but has not yet made a decision. IRNA quoted Pezeshkian as saying Tehran is seeking to resolve problems through dialogue and that Supreme Leader Ayatollah Mojtaba Khamenei has granted the government the powers to do so. Foreign Minister Abbas Araghchi said an agreement with Washington is possible if it shows goodwill and genuinely seeks a peaceful solution, that mediators are discussing an Iranian proposal presented at the United Nations General Assembly in September, and that Tehran expects sanctions to be lifted, the US military presence reduced to previous levels and the blockade lifted.
The market had priced in the risk of a major military escalation after the US midterm elections, while Khamenei on Saturday called on the armed forces to respond immediately to any threat. Ryan McKay, director of commodity strategy at TD Securities, said news of diplomatic efforts will move crude prices strongly because much of the recent gain was a risk premium, but he does not expect the premium to erode fully on diplomacy headlines alone while the war has no concrete end and attacks on tankers continue.
What do these terms mean?
Brent crude: The benchmark crude produced in the North Sea, used as a reference for pricing about two thirds of the world's oil.
West Texas Intermediate: The US benchmark crude underpinning US oil futures contracts.
Risk premium: The extra price buyers pay for oil to cover the possibility of supply disruption or the outbreak of conflict.
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