Brent Falls 1.89% to $114.51 on Hopes for Regional De-escalation
Key Facts
Brent futures fell $2.21, or 1.89%, to $114.51 a barrel at 0426 GMT on Monday, October 26, according to Reuters. West Texas Intermediate fell $2.23, or 2.16%, to $101.04 a barrel at the same time. The decline came after Brent ended the previous week up 6% and WTI rose 2.3%. Reuters linked the morning session’s retreat to hopes of a pause in fighting after Qatari mediators traveled to Tehran on Sunday as part of a regional effort coordinated with the United States. But the diplomatic move did not dispel supply risks, as attacks continued and concerns about navigation through the Strait of Hormuz remained.
Prices had settled nearly $3 higher on Friday after Houthi attacks in Saudi Arabia raised supply concerns. Reuters said Brent posted a weekly gain of 6%, compared with 2.3% for WTI, as oil rose during the week to levels near six-month highs. By contrast, oil analyst Vandana Hari said concerns about renewed military action in the Middle East, which had driven much of the previous week’s rally, eased on Monday morning. “But this calm may be temporary,” she added. The retreat reflects a shift in market risk assessments after the rally, while an analyst at Phillip Nova described the move as closer to position adjustment and risk management than to a meaningful improvement in the supply outlook.
Signs of tension continued over the weekend. The Houthis said they targeted an airport and oil facilities in Saudi Arabia on Saturday, while Saudi Arabia said on Sunday it had intercepted more missiles and drones. According to Reuters, these developments kept regional supply risks in play alongside continued concerns about disruption to shipping through the Strait of Hormuz. A Phillip Nova analyst said the retreat did not reflect any significant improvement in supply fundamentals, with risks around the strait remaining. Qatar’s foreign ministry also linked the escalation to a broader cost for the region, the world, the global economy and energy supplies, saying the solution would not be military.
The Qatari moves are part of a mediation effort between Washington and Tehran. In a briefing dated October 20, Qatar’s foreign ministry said that communications, visits and exchanges of messages had not stopped, and that dialogue was the path to a lasting solution. A person briefed on the efforts told Reuters that Qatari mediators traveled to Tehran on Sunday to reduce regional tensions in coordination with the United States. The ministry said Qatar was seeking a solution that would end the crisis, reopen the Strait of Hormuz and halt the escalation, while stressing the need to avoid the cost the escalation imposes on energy supplies. These are stated negotiating goals, at a time when attacks have not stopped and there has been no actual improvement in supply flows.
Looking ahead, Hari said U.S. President Donald Trump had not dispelled investors’ expectations that strikes on Iran could occur after the U.S. midterm elections on November 3. She said volatility could remain high, with risks tilted to the upside. In Singapore on Monday, International Energy Agency chief Fatih Birol said he did not expect energy markets to return to pre-Iran war levels in 2027. In a separate development concerning supply resilience, Saudi Arabia and Singapore announced that Aramco would begin storing crude oil in Singapore in the second half of 2027. The market outlook remains tied to the course of de-escalation and shipping security, after Reuters said disruption to trade through the Strait of Hormuz and the Bab el-Mandeb Strait remained among the consequences of the U.S.-Israeli war on Iran, which began on February 28.