Solid Gold Berjangka – Global oil prices fell by more than 3% in trading on Monday (Nov 2) after Iran and Qatar continued discussions for the third consecutive day, aiming to reach an agreement regarding the conflict involving the U.S., Israel, and Iran. Brent crude dropped 3.2% to US$109.75 per barrel, while West Texas Intermediate (WTI) weakened by 3.3% to US$100.69 per barrel.
This decline follows Brent’s closing of October at a six-month high. Growing optimism regarding diplomatic progress, combined with the absence of any major military escalation over the weekend, prompted profit-taking and reduced some of the geopolitical risk premium that had previously supported oil prices.
Iranian Foreign Minister Abbas Araqchi stated that talks with Qatari mediators are ongoing and showing progress. Tehran remains open to a diplomatic resolution, though it has emphasized that its forces are prepared for potential conflict should tensions flare up again.
The market remains cautious ahead of the U.S. midterm elections on Tuesday (Nov 3). Market participants are concerned about the possibility of intensified rhetoric or military activity directed at Iran following the elections. Such a scenario could drive up the risk premium once more, pushing oil prices higher if threats to supply escalate.
On the supply side, Saudi Arabia reportedly increased its crude oil exports in October compared to September, even as its energy infrastructure continues to face threats from the Houthi group. Risks to shipping in the Strait of Hormuz also remain a concern, following a series of incidents involving oil tankers that have heightened worries regarding the security of one of the world’s most vital energy corridors.
Meanwhile, OPEC+ has decided to maintain its production targets for December, signaling no immediate changes to its supply policy. The future direction of oil prices will depend heavily on the outcome of U.S.-Iran diplomacy and developments following the U.S. midterm elections—factors that will determine whether the geopolitical risk premium continues to shrink or begins to rise again. (srh)