Oil Falls More Than 1% as Talks Seek to Reopen Strait of Hormuz Within Two Days
Key Facts
Oil prices fell more than 1% in early Asian trading on Monday, November 2, after Iranian and Qatari officials discussed a proposal to reopen the Strait of Hormuz within two days and resume peace talks with the United States. By 00:11 GMT, Brent futures had fallen $1.59, or 1.40%, to $111.84 a barrel, while West Texas Intermediate crude was down $1.56, or 1.50%, at $102.56. The move followed three consecutive days of Iranian-Qatari talks aimed at advancing an agreement to end the U.S.-Israeli war on Iran, Reuters reported. The proposal puts the Strait of Hormuz, a major energy corridor, at the center of any potential de-escalation, but ties its reopening to Washington meeting Tehran’s demands. The diplomatic news therefore had a limited effect on prices amid the risk that the conditions could stall or escalation could return.
Iran’s demands include lifting newly imposed U.S. sanctions, restoring the oil waivers granted in June, and reducing the U.S. military presence in the region. Tehran is also seeking recognition of new shipping routes in the strait designated by Iran and Oman, and an end to the conflict on all fronts. The proposal did not indicate that the United States had accepted these conditions; instead, it makes their implementation a prerequisite for resuming peace talks and reopening the passage. Iranian Foreign Minister Abbas Araghchi said Iranian negotiators were in Qatar, confirming there were no direct talks with the United States. Meanwhile, Qatari and Pakistani mediation consultations on the terms are continuing, and Qatari officials visited Tehran for talks. Tying the strait’s reopening to these demands means the flow of supplies remains dependent on negotiations that have not moved to direct contact between the two sides.
U.S. Secretary of State Marco Rubio said contacts had not stopped and that Washington was open to a diplomatic settlement, but added that he did not know the timeframe for the talks. He was quoted as saying: "There are multiple conversations. The conversations have not actually stopped," adding: "If there is a diplomatic solution, we would be open to it." At the same time, President Donald Trump said negotiations were going "very well," but noted that the United States still had Iranian targets it wanted to deal with. Trump has repeatedly hinted at the possibility of launching attacks on Iran after the midterm elections scheduled for November 3. Officials on both sides said they were preparing for the possibility of renewed military escalation. These statements keep the risk of confrontation in play alongside diplomatic efforts, even as prices fell at the start of the week.
Brent ended October at its highest level in six months amid concerns that the conflict could escalate after the U.S. midterm elections. The crude closed at $113.43 a barrel on October 30, compared with $110.80 in the previous session. Tim Waterer, chief market analyst at KCM Trade, said the morning decline appeared to be a technical correction after the previous week’s gains. He added that hopes for diplomatic progress and the absence of any tangible military escalation over the weekend eased immediate pressure on prices. But he warned that intensifying rhetoric on Iran after the elections could push Brent toward $120 a barrel. Those risks remained relevant to the market after Brent volatility rose during April and May 2026, when the average daily move was $4 a barrel, compared with $1 in the same two months of 2025, according to the U.S. Energy Information Administration.
Energy Information Administration data show the scale of the supply disruption passing through the strait: oil flows through Hormuz fell from 20.9 million barrels per day in the first quarter of 2025 to 4.9 million barrels per day in the second quarter of 2026. The agency said uncertainty over the passage’s reopening contributed to price volatility during April and May of this year. On the supply front, OPEC+ kept its December production targets unchanged, in line with market expectations that no further policy adjustments would be made before the following year. This means the market’s near-term focus is on the course of mediation and security developments, alongside the impact of disrupted traffic through the strait. The Energy Information Administration is scheduled to release its Short-Term Energy Outlook on November 10. Its weekly petroleum status report is due on November 12, 2026, at 12 p.m. Eastern Time, following the Veterans Day holiday.