Brent Falls 1.89% to $114.51 as Regional Mediators Move to Contain Tensions
Key Facts
Brent crude futures fell $2.21, or 1.89%, to $114.51 a barrel by 0426 GMT on Monday, October 26, while West Texas Intermediate fell $2.23, or 2.16%, to $101.04. Prices declined as regional diplomacy moved to contain tensions, after Qatari mediators traveled to Tehran on Sunday in an effort to de-escalate in coordination with the United States, according to Reuters. In Tehran, senior delegations from Saudi Arabia, Pakistan and Turkey met Iranian officials on Monday, according to the Associated Press. The meetings aim to avert a renewed conflict between Iran, Israel and the United States, amid concern that any escalation could affect energy supplies. But the daily decline followed a strong week for oil, keeping prices at elevated levels.
Brent ended the week to October 23 up 6%, while WTI rose 2.3%, after prices closed nearly $3 higher on Friday. Reuters said Houthi attacks in Saudi Arabia on Friday raised concerns about energy supplies and helped support prices before they fell in early Monday trading. Oil analyst Vandana Hari attributed the previous week’s gains to fears of renewed military action in the Middle East. She added that those concerns eased at the start of trading, but warned the calm could be temporary. “Fears of renewed military action in the Middle East, which fueled much of last week’s crude rally, have eased this morning, but the calm may prove temporary,” she said.
Risks to infrastructure and supplies remained in focus alongside diplomatic efforts. The Houthis said they targeted an airport and oil facilities in Saudi Arabia on Saturday, while Saudi Arabia said it intercepted more missiles and drones on Sunday, according to Reuters. The Associated Press noted that Houthi attacks and the war in Yemen were among the topics of the Tehran talks. A Saudi spokesman said the delegations hoped to find ways to reduce tensions and strengthen regional security and stability. He was quoted as saying participants were seeking “ways to reduce tensions, enhance regional security and support its stability.” This adds a direct security dimension to the talks alongside efforts to prevent a broader resumption of fighting.
The schedule for the Tehran meetings was not set, according to Iranian Foreign Ministry spokesman Esmaeil Baghaei, but he said the talks would “certainly address the most urgent threats to regional security.” The mediation comes in the context of an agreement reached in June, brokered in part by Pakistan and Qatar, that aimed to fully reopen the Strait of Hormuz to shipping and end the U.S. blockade of Iranian ports, paving the way for broader negotiations on the nuclear program. Baghaei said Tehran had not closed the door to diplomacy and that messages were being conveyed to the United States through intermediaries, according to AP. The talks are taking place amid concern about a renewed conflict ahead of Israel’s election on Tuesday and the U.S. midterm elections on November 3. Those political dates kept the mediation in focus as markets remained cautious.
Market sensitivity extends beyond direct military developments to shipping disruptions. Reuters said the effects of the U.S.-Israeli war on Iran, which began on February 28, continue to ripple through energy markets as companies adapt to disruptions to commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait. The International Energy Agency said observed global oil inventories fell by 10 million barrels in September, leaving them 509 million barrels below their level at the end of February. The agency’s board also noted continued tightness in oil markets, particularly diesel, and said it was ready to take further steps to address global energy market challenges. Agency chief Fatih Birol said he did not expect energy markets in 2027 to return to pre-war levels.
In the near term, Hari said market expectations of U.S. strikes on Iran after the midterm elections on November 3 had not faded, and that market risks remained tilted to the upside. She added that U.S. President Donald Trump had not dispelled those expectations, Reuters reported, without saying that he had said he was considering an agreement with Tehran. On supply preparations, Saudi Arabia and Singapore said Aramco would begin storing crude oil in Singapore in the second half of 2027 to strengthen the resilience of its regional supply chain. The International Energy Agency said it would continue monitoring completion of the collective stock release launched in March 2026. It said it would provide G7 leaders and its board with an updated market assessment focused on diesel.