International oil prices fell more than 7% in a single day as hopes grew that the United States and Iran could enter peace negotiations. Prices that had climbed to nearly $120 a barrel on military tensions in the Middle East reversed course amid expectations of a diplomatic solution.
On the 2nd (local time) on the ICE Futures exchange in London, December-delivery Brent crude futures settled at $104.77 a barrel, down 7.63% from the previous session. The same day, December West Texas Intermediate (WTI) futures on the New York Mercantile Exchange also closed down 7.36% at $96.46 a barrel. During the session, Brent slipped as low as the $103 range and WTI to the $95 range.
On Oct. 30, Brent rose to $117.64 a barrel amid spreading concern that armed conflict in the Middle East could widen, hitting its highest level in six months. But market sentiment shifted abruptly when news emerged that the United States and Iran were seeking a diplomatic exit to end the war.
What triggered the latest drop was Iran’s willingness to talk. Iranian President Masoud Pezeshkian said Iran is seeking dialogue to get past the crisis, adding that Supreme Leader Ayatollah Mojtaba Khamenei has given the government the authority to do so.
Iran is also discussing, through mediating countries such as Qatar and Pakistan, a plan to reopen the Strait of Hormuz and resume peace talks. It is reported to have set conditions for lifting the blockade of the strait and conveyed that it would reopen the strait within two days if the United States accepts them.
U.S. President Donald Trump also added weight to expectations of negotiations by saying in a speech the same day that Iran wants a deal with the United States and that an agreement could be reached.
However, with no shortage of variables before talks are actually concluded and the Strait of Hormuz is normalized, oil prices are expected to keep swinging for some time.