Brent closes at $104.98 as hopes of military escalation recede
Key Facts
Brent crude closed at $104.98 a barrel on Nov. 2, compared with $113.43 on Oct. 30, according to EL7 data. West Texas Intermediate ended the session at $96.72, versus $104.12 at the previous close. Reuters attributed the two benchmarks’ decline in Monday’s settlement to growing hopes of an end to the war and stable oil supplies from the Middle East. The agency reported that Brent fell 7.63% and WTI 7.36% at settlement, to $104.77 and $96.46 a barrel, respectively. U.S. President Donald Trump said in a post that oil had fallen "about $10 a barrel" because people feel a war with Iran will not happen, describing the drop as a record.
In a phone interview with Axios on Monday, Trump said he was "in no rush" to decide whether to resume fighting with Iran. He added: "We’ll do something one way or the other, but there’s no rush. We’ve weakened them financially." He also said the United States had set no dates for resuming strikes and wanted to ensure Iran would not rebuild its nuclear program or try to do so. In his post, Trump had linked the decline in oil prices to expectations of avoiding war, while making no final decision on the next step. In remarks reported by the Associated Press, he said he hoped voters would notice the fall in oil prices, linking it to preventing Iran from acquiring a nuclear weapon.
The price decline comes as mediation efforts between Washington and Tehran continue. Axios reported that Qatari mediators had prepared a draft agreement setting out a sequence of confidence-building measures over 3 days, aimed at resuming direct negotiations. The mediators are awaiting both sides’ responses, while Qatari mediator Ali Al-Thawadi traveled to Tehran on Monday to continue the talks. The Associated Press said diplomatic efforts had made progress and mediators were working on a framework under which Iran would halt its attacks in the Strait of Hormuz in exchange for the United States lifting its blockade of Iranian ports. Further talks are scheduled for later this week, the agency reported.
But the diplomatic track does not rule out the possibility of escalation. The Associated Press reported that Israeli Prime Minister Benjamin Netanyahu was pushing for another wave of strikes on Iran after Tuesday’s U.S. midterm elections. It also quoted a person briefed on a call over the weekend as saying Trump had not committed to military action, while U.S. allies in the Middle East warned that new strikes could destabilize the region. Iranian President Masoud Pezeshkian said the supreme leader had given the government "certain powers" related to peace talks, bolstering expectations of a diplomatic breakthrough, according to Reuters. Oil supplies through Hormuz remain a key part of the backdrop to market moves: an average of 20 million barrels a day of crude and oil products passed through the strait in 2025, or about 25% of global seaborne oil trade, according to the International Energy Agency.
Risks tied to the strait take on added importance given the limited alternative routes. The International Energy Agency estimates available capacity to divert crude flows away from Hormuz at between 3.5 and 5.5 million barrels a day. Sultan Al Jaber, chief executive of ADNOC, said global oil inventories had been depleted by about 1 billion barrels since the war disrupted shipping through the strait. Brent ended October at a 6-month high amid fears of an escalation in the conflict after the U.S. midterm elections, according to Reuters. In broader markets, falling oil prices helped most stocks listed in the S&P 500, although the index itself fell 0.5% on Monday, according to the Associated Press.