Crude Oil Slides Over 7% as US-Iran Talks Raise Hopes for Peace

Crude oil prices recorded a sharp decline on Monday as renewed diplomatic initiatives between the United States and Iran raised expectations of a possible end to the eight-month conflict. The developments eased fears of further interruptions to energy supplies from the Middle East.

Brent crude settled at $104.77/bbl, falling 7.6%, while West Texas Intermediate (WTI) closed at $96.46/bbl, down 7.4%. Both benchmarks registered their largest daily percentage losses since July 27. At the time of writing, prices had recovered slightly, with Brent trading around $105.37/bbl and WTI at $97.04/bbl, representing gains of approximately 0.6%.

The decline came after Washington and Tehran signaled willingness to pursue diplomatic engagement. US President Donald Trump stated that Iran was interested in reaching an agreement, while Secretary of State Marco Rubio emphasized that the US favored a diplomatic resolution. Iranian President Masoud Pezeshkian also expressed Tehran’s willingness to engage in dialogue. Foreign Minister Abbas Araghchi added that a deal could be achievable if the US showed goodwill and prioritized a peaceful approach.

Despite the positive signals, uncertainty surrounding the conflict remained elevated, as no formal agreement had been reached. During October, oil prices had incorporated a substantial geopolitical risk premium amid expectations of renewed military escalation following the US midterm elections. Earlier indications of possible peace negotiations had also failed to prevent further conflict.

Market analysts cautioned that diplomatic progress alone may not be sufficient to remove the risk premium entirely, particularly while tanker-related disruptions and Houthi attacks continue. Consequently, the oil market remains sensitive to developments in US-Iran relations and the broader Middle East.

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