Oil Falls 4.1% to $99.82 as Markets Watch for Path to Reopening Strait of Hormuz

Key Facts

Brent crude fell 3.9% to $109.01 a barrel, while U.S. crude dropped 4.1% to $99.82 early Monday, November 2, according to Associated Press data. The declines came amid diplomatic hopes tied to ending the U.S.-Israeli war on Iran and reopening the Strait of Hormuz. But the early moves did not mean shipping had resumed or a deal had been reached, as the proposal on the table remained conditional on Washington's response. EL7 closing data for the same day put Brent at $110.36 and West Texas at $100.94. Prices at the previous close on October 30 were higher, with Brent at $113.43 and West Texas at $104.12.

The price retreat coincided with continued contacts between Iranian and Qatari officials for a third consecutive day, in an effort to reach a deal to end the war, according to Reuters as reported by MarketScreener. The negotiations were indirect, and the source reported no agreement or confirmed progress. Iranian Foreign Minister Abbas Araghchi said a proposal could allow the Strait of Hormuz to reopen to shipping within two days if the United States met Iran's conditions. He added that no direct talks were taking place between Washington and Tehran. The prospect of reopening the waterway was therefore tied, according to the reported remarks, to a U.S. response to Iranian demands whose details were not given here.

Araghchi said the ultimate outcome of diplomatic efforts depended on the United States' responses to “Iranian questions.” The statement puts Washington's response at the center of a process that could lead to reopening the strait, without setting a date for an agreement or establishing that both sides had accepted common terms. With no direct talks, indirect contacts through mediators remained the focus of the efforts described. That leaves shipping through Hormuz tied to developments in the negotiations and the parties' positions. The two-day timeframe Araghchi cited is a possibility in the proposal if Washington responds, not a confirmed date for the strait's reopening.

Global oil supplies remained under pressure from uncertainty over the situation in the Middle East, particularly the prospect of reopening the Strait of Hormuz, according to the Associated Press. Reuters quoted the chief executive of Abu Dhabi National Oil Company as saying global oil inventories had fallen by about 1 billion barrels since the war disrupted shipping through the strait in late February. Reuters also pointed to a recent increase in attacks on oil tankers transiting the strait. These risks place price movements in the context of disruption to supplies and inventories, even as crude fell in early trading. In historical context, the Associated Press said Brent was near $72 a barrel in late February, before the war.

Oil prices ended October at their highest in six months, according to Reuters via Investing.com, as traders prepared for a possible escalation of the war after the U.S. midterm elections. The report said Brent settled near $118 a barrel on Friday, its highest level since April. On November 1, seven key OPEC+ countries kept December production targets unchanged, according to the organization's statement as reported by Reuters. The countries were Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, while the report cited disruption to members' exports because of the war. The group's 21 members are due to meet on November 29, with analysts expecting them to discuss 2027 production quotas after reviewing production capacity during the fourth quarter.

On a parallel diplomatic track, the Associated Press said China would send a special envoy to Iran, Oman and Saudi Arabia in early to mid-November. This comes as Qatari-Iranian contacts continue and the proposal concerning the strait remains contingent on Washington's response, according to Araghchi's remarks. On the price outlook, Goldman Sachs raised its forecast for Brent in December 2026 to $105 a barrel from $90, which Reuters attributed to the risk of supply disruptions in the Middle East. The firm also forecast U.S. crude at $94 in December, compared with its previous forecast of $81. These remain estimates attributed to the firm, while upcoming developments center on U.S. responses, shipping through the strait and the OPEC+ meeting scheduled for November 29.