Brent Falls 3.9% to $109.01 as Washington’s Response on Hormuz Opening Terms Is Awaited
Key Facts
Oil prices fell in early trading on November 2 as Washington’s response was awaited to an Iranian proposal that could allow shipping through the Strait of Hormuz to resume. The Associated Press said Brent crude fell 3.9% to $109.01 a barrel, while U.S. crude lost 4.1% to reach $99.82. The agency linked the move to diplomatic efforts to avert a return to full-scale war, but the proposal remained conditional on the United States meeting several Iranian demands. Iranian Foreign Minister Abbas Araghchi said direct talks with Washington were not under way. He said opening the strait within two days remained a possibility tied to Washington’s response, not a final agreement.
The Iranian delegation left Qatar after days of discussions, but exchanges of messages with the United States continued through the mediator, Iranian officials told the Associated Press. Tehran is awaiting the U.S. response to the proposal to reopen the strait to shipping within two days, according to the agency’s report. Araghchi said the final outcome of the efforts depended on Washington’s response to “Iranian questions.” This means negotiations have yet to reach an understanding that would ensure shipping resumes. While implementing the proposal could ease market concerns about supply disruptions, its conditions and the need for a U.S. response leave the timing of the waterway’s reopening uncertain.
EL7 data showed Brent closed at $113.43 a barrel on October 30, then at $110.36 on November 2. West Texas crude also fell from $104.12 to $100.94 between the two closes. These figures reflect two daily closes, while the Associated Press reported early-trading prices on November 2; that is why they differ from closing levels. Brent futures had previously risen 13% since the start of September to about $107 a barrel, according to the International Energy Agency’s October report. But physical North Sea crude rose 43% to $134 a barrel during the period covered by the report, reflecting a widening gap between futures and physical prices.
Shipping risks remain despite the price decline. The Associated Press, citing the British maritime operations monitor, said October saw the highest number of reported attacks on commercial shipping since the first weeks of the war in March. Lloyd’s recorded 28 attacks on ships during October, the highest number since the war began, the agency said. Before the war, the Strait of Hormuz carried shipments equivalent to about 20% of global oil and fuel supplies, according to a Reuters report. Attacks on shipping in the Gulf and the strait increased market volatility in October, keeping disruption to the waterway at the center of supply concerns.
The International Energy Agency pointed to a partial improvement in oil flows during September, with crude exports from Gulf producers rising by 4.4 million barrels a day to 13.9 million, exceeding 75% of pre-war levels. Oil flows through the Strait of Hormuz also rose by 3.7 million barrels a day to 10.9 million. However, the agency said this movement coincided with ship-to-ship transfers in the Gulf of Oman. The cost of shipping crude from the Gulf to Asia on a large tanker rose to more than $37 a barrel by mid-October, more than five times its pre-war level. The agency attributed higher freight rates to congestion around the strait, trade rerouting, longer delivery times and declining fleet efficiency.
Estimates of vessel movements remain uncertain: the International Energy Agency said a large and growing share of tankers crossed sea lanes with their transponders switched off, alongside reports of GPS jamming and manipulation of automatic identification signals. On market balances, the agency said global availability of diesel and gasoil fell by 1.5 million barrels a day in the second quarter and 1.7 million in the third quarter compared with the same periods a year earlier. It added that global oil demand contracted by 5 million barrels a day in the second quarter and 3.7 million in the third, and forecast a decline of 2.5 million barrels a day in the fourth quarter. It also expected the oil market to remain in deficit through year-end, with tight middle-distillate supplies potentially continuing through 2027. These estimates place continued tightness in some supplies in the market’s background, even as Gulf flows improve and prices fall in early trading.
In a separate supply decision, OPEC said the seven countries participating in the voluntary adjustments would maintain during December 2026 the production level required for September 2026. The decision applies to the seven countries participating in these adjustments, according to the organization’s statement. The group set its next meeting to review market conditions for November 29, 2026. In a subsequent diplomatic move, China plans to send a special envoy to Iran, Oman and Saudi Arabia in early to mid-November, according to the Associated Press. These moves come as traders await Washington’s response to Iran’s proposal, while shipping through Hormuz remains exposed to attack risks and high freight costs.