Brent Falls 7.63% to $104.77 on Hopes of De-escalation in Iran War

Key Facts

Brent futures fell 7.63% to $104.77 a barrel at Monday’s settlement on November 2, while West Texas Intermediate crude declined 7.36% to $96.46, after Iranian-Qatari talks boosted hopes for stable supplies from the Middle East. Reuters attributed the decline to signs that the U.S.-Israeli war on Iran could end, potentially stabilizing crude flows. Iranian President Masoud Pezeshkian said Tehran "will try to solve the problem through dialogue." The report said Qatari mediators traveled to Tehran for talks with Iranian Foreign Minister Abbas Araghchi on a possible agreement between the United States and Iran. The drop reprices supply risks that had driven oil to elevated levels in the preceding period.

The decline came after Brent ended October at a six-month high, amid fears of a renewed escalation in the Middle East conflict after the U.S. midterm elections. Sultan Al Jaber, chief executive of ADNOC, said the world had consumed "almost a billion barrels" from its inventories since the war disrupted shipping through the Strait of Hormuz. This backdrop highlights the pressure on supplies during the conflict, even as prospects for de-escalation improved. In early Asian trading on Tuesday, November 3, Brent rose 0.5% to $105.30 a barrel. Investors were assessing the course of peace talks between the United States and Iran, underscoring how sensitive crude prices remained to developments in the negotiations.

The oil decline did not translate into a broad rise in Asian stocks: the Asia-Pacific share index excluding Japan fell 1.4% to its lowest level since October 23, and Taiwanese stocks dropped 3.3% on Tuesday. Australian stocks, by contrast, rose 0.3%, bucking the broader trend tracked by Reuters. Local Australian market indicators showed the S&P/ASX 200 rising 0.4% in the same session, while the Shanghai Composite fell 0.7%. These diverging moves show that lower crude prices alone were not enough to push regional markets in a single direction. The available figures also do not establish gains in any particular Australian or Chinese airline stocks.

Oil’s impact was clearer in U.S. airline stocks, which face large fuel bills. United Airlines shares rose 4.8% and Southwest Airlines shares gained 3.6% on Monday, and the Associated Press said lower oil prices helped shares of companies with large fuel expenses. These moves offer an example of the market responding to an expected reduction in energy costs for fuel-intensive companies. But a decline in crude does not mean airline fuel bills fall immediately; the timing of the pass-through can depend on actual fuel prices and hedging. The available facts provide no comparable figures for Asian airline stocks.

In China, the services activity index stood at 50.0% in October, down 0.2 percentage points from September, while the overall non-manufacturing activity index was 49.7%, a decline of 0.5 percentage points. The services reading points to a weaker month than the previous one, while the overall non-manufacturing reading indicates activity remained below 50%. In Australia, the Reserve Bank raised its cash rate target by 25 basis points to 4.85% in its decision issued on November 3. The bank’s statement said inflation remained broad-based, attributing part of it to "higher prices for fuel and other goods affected by the conflict in the Middle East." The reference puts energy prices at the heart of Australia’s inflation and monetary policy equation, even as oil fell in Monday’s session.

Upcoming dates include publication of the minutes of the Australian Monetary Policy Board meeting on November 17, followed by the board’s next meeting on December 8, when the bank will update its cash rate target. The Australian Bureau of Statistics has also set November 5 as the release date for September international trade in goods data. These releases will add information on the central bank’s stance and Australian trade as markets track de-escalation talks and their potential impact on oil supplies. The price path will remain tied to developments in Gulf supplies: Reuters cited a Goldman Sachs estimate that Brent could reach $140 in 2027 if Gulf production remains 3.5 million barrels a day below its 2025 average. That remains a scenario conditional on the stated production shortfall continuing.