Oil prices fell sharply on Monday as renewed diplomatic efforts to end the conflict involving the US and Iran raised hopes of easing tensions in the Middle East, offering some relief to energy markets after a strong rally in October.
Brent crude futures, the global benchmark, dropped 3.2% to $109.75 a barrel, while US West Texas Intermediate (WTI) crude declined 3.3% to $100.69.
The international benchmark had traded in the mid-$110 range last week.
Despite Monday’s retreat, Brent finished October up around 14%, closing around its highest level in six months as traders worried about a possible escalation after the November 3 US midterm elections.
Trump prefers diplomatic solution, Rubio says
US Secretary of State Marco Rubio said on Saturday that President Donald Trump preferred resolving the conflict through diplomacy, although military action remained an option.
“The president prefers to solve it diplomatically,” Rubio told reporters, adding that Trump had not made a decision on whether to resume military strikes against Iran.
Rubio also said Washington remained prepared to use military force if necessary, but would be open to an agreement that addressed US national security concerns.
Meanwhile, Iranian and Qatari officials have held discussions for a third consecutive day, with the mediation efforts focused on finding a path towards ending the conflict and reopening the Strait of Hormuz.
Iranian Foreign Minister Abbas Araghchi described the discussions as ongoing and progressing, saying Tehran remained prepared for both diplomacy and defence.
Iran has indicated that a deal would need to address its demands, while Supreme Leader Mojtaba Khamenei warned that any renewed US or Israeli attack would trigger “an immediate and geographically unrestricted response.”
The diplomatic developments come as reports suggest the US and Israel have prepared plans for renewed strikes following Tuesday’s midterm elections.
Trump has not confirmed any decision to launch another offensive, and Rubio said no final decision had been made even as reports have stated that the administration is planning fresh escalation after the polls.
Goldman Sachs raises oil price forecasts
Goldman Sachs has raised its oil price projections, citing persistent risks to supplies and the possibility that geopolitical disruptions could extend into 2027.
The bank increased its December Brent forecast to $105 a barrel from $90 and lifted its WTI estimate to $94 from $81.
For 2027, it now expects Brent to average $88, compared with its previous forecast of $80. Its WTI projection was raised to $78 from $73.
Goldman also outlined an upside scenario in which Brent could reach $140 and average around $130 in 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average.
“Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside,” the bank said in a note.
It added that geopolitical fragmentation, including the Middle East and Russia-Ukraine conflicts, creates substantial disruption risks that are difficult to predict.
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