Brent falls 1.89% to $114.51 a barrel in early trading
Key Facts
Brent crude futures fell 1.89% to $114.51 a barrel in early trading on October 26, Reuters reported, reversing part of the previous week's gains. West Texas Intermediate futures fell 2.16% to $101.04 a barrel at the same time. Reuters linked the decline to hopes of easing the confrontation between the United States and Iran, as Qatari mediators traveled to Tehran on Sunday in an effort to reduce tensions in coordination with Washington. Brent closed at $114.35 at the end of the October 26 session, according to EL7 data, compared with $116.72 on October 23. Reuters said the decline followed a week in which Brent rose 6% and WTI 2.3%.
Diplomatic signals helped ease concern about a resumption of hostilities, but U.S. President Donald Trump's remarks were limited to that day. The Associated Press quoted him on October 25 as saying, "No, there will be no attack today," a statement that did not rule out later strikes more broadly. A spokesman for Iran's Foreign Ministry said messages were still being conveyed to the United States through mediators. In this context, the Qatari mediators' visit to Tehran was of direct significance to markets, as it was part of an effort to contain regional tensions in coordination with Washington. The prospect of de-escalation continued to weigh on prices after a rally linked to fears of supply disruptions.
The price decline did not end concerns about the security of Gulf supplies, as attacks on Saudi targets continued. Reuters reported that Houthi attacks on Saudi Arabia on Friday fueled supply concerns, after prices closed up about $3. These risks keep oil transport routes in traders' focus, particularly given the commercial importance of the Bab el-Mandeb Strait. The Associated Press reported that Saudi Arabia and the Yemeni government launched a military campaign to push Iran-backed Houthis away from the strait, a key corridor for trade in oil and other goods. The agency also said U.S. and Gulf oil exports had been largely restored despite Iran's disruption of the Strait of Hormuz for months.
Admiral Brad Cooper, commander of U.S. Central Command, said more than 3,000 commercial vessels had transited the Strait of Hormuz with U.S. military support during the previous six months, according to the Associated Press. The figure provides context for shipping through the passage, but does not mean flows have returned to their usual pattern. On prices, the average spot price of Brent crude rose to $114 a barrel in September, up $23 from August, according to the U.S. Energy Information Administration. The agency attributed the increase to attacks on oil infrastructure and tankers in the Middle East. The comparison shows that the early trading decline on October 26 came after a period in which prices remained supported by supply risks.
In its October outlook, the Energy Information Administration estimated that the average spot price of Brent would reach $105 a barrel in the fourth quarter of 2026, up $14 from its estimate the previous month. It said constrained oil flows from the Middle East would keep production offline during that quarter. The agency expects most of the region's production to return to its pre-conflict averages by the end of the second quarter of 2027, with Brent averaging $87 in that quarter. It warned, however, that conflict-related flow disruptions could make near-term prices more volatile than the forecast assumes. In the nearer term, the Investing.com calendar listed the American Petroleum Institute's weekly crude inventory data for October 27, while the Energy Information Administration set its regular weekly release for Wednesday at 10:30 a.m. Eastern time.
Vandana Hari, founder of Vanda Insights, told Reuters that concerns about renewed hostilities in the Middle East had eased in the morning, but said the respite might be temporary. She added: "We expect volatility to remain elevated, with risks still skewed to the upside." The assessment reflects the market's continued sensitivity to any development affecting shipping or oil exports, even as new diplomatic efforts emerge. Gains in the week ended October 23 followed a 6% jump in Brent, putting the early trading decline in the context of prices fluctuating between signs of de-escalation and supply risks. Inventory data scheduled during the week will remain among the near-term milestones investors are watching alongside developments in the region.