Oil prices declined significantly on Monday, with Brent crude down 6% to $106.65 per barrel and US West Texas Intermediate crude down 6.1% to $97.75 per barrel. This drop was driven by growing hopes for a peaceful resolution to the conflict between the US and Iran. Reports emerged of talks between Iranian officials and Qatari mediators aimed at ending the war and reducing energy supply disruptions in the Middle East.
The decline in oil prices followed statements from Iranian President Masoud Pezeshkian, who said that the country's Supreme Leader, Ayatollah Ali Khamenei, had granted the government limited powers to engage in peace talks. Pezeshkian indicated that Tehran would attempt to resolve the crisis through dialogue. An informed source revealed that Iranian negotiators had been in talks with Qatari mediators for several days, discussing a draft proposal and the possibility of a follow-up meeting.
Iranian Foreign Minister Abbas Araghchi emphasized that consultations with Qatari mediators were ongoing, stressing Iran's readiness for both diplomatic and defensive paths. This development has contributed to a decrease in the risk premium that had driven oil prices up in the previous week. Analysts noted that continued diplomatic communication between Washington and Tehran could further reduce the risk premium.
Despite the decline in oil prices, concerns about energy supplies remain. Recent attacks on oil tankers passing through the Strait of Hormuz, a critical waterway for global oil trade, have highlighted these risks. Sultan Al Jaber, CEO of ADNOC, stated that the world was depleting its energy reserves, with around 1 billion barrels withdrawn from global stockpiles since the US-Iran conflict began and shipping disruptions in the Strait of Hormuz.
However, data from specialized shipping tracking companies showed that Saudi Arabia's crude oil exports increased in October compared to September, despite regional tensions and maritime attacks. This development suggests that some producers are managing to maintain supply levels.
In a related forecast, Goldman Sachs raised its oil price estimates, warning that Brent crude could reach $140 per barrel by 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average. This projection underscores the ongoing uncertainty in the oil market.
Most Gulf stock markets rose on Monday as investors monitored developments in Iranian-Qatari talks and assessed their potential impact on regional stability. The Saudi index increased by 0.5%, supported by gains in materials, real estate, and industrial stocks. Meanwhile, the Egyptian stock market declined, with the main index down 0.7% due to selling pressure on major stocks.
Key points
- Oil prices fell 6% amid hopes for diplomatic talks between the US and Iran.
- Iranian President Masoud Pezeshkian stated that Tehran would seek to resolve the crisis through dialogue.
- Despite the decline, concerns about energy supplies remain due to recent attacks on oil tankers in the Strait of Hormuz.
