Global oil prices weakened again during trading on Tuesday (October 27, 2026), marking a second consecutive day of decline following positive developments in diplomatic efforts to de-escalate the conflict between the United States (US) and Iran. Brent crude for December delivery fell 0.6% to US$115.15 per barrel as of 08:12 Singapore time, while West Texas Intermediate (WTI) dropped 0.5% to US$101.28 per barrel. This correction moves oil prices further away from their six-month highs, fueled by growing optimism that the conflict in the Middle East will not spiral into a broader war.
This optimism follows visits to Tehran on Monday by high-ranking officials from Saudi Arabia, Pakistan, and Turkey to discuss a potential resolution to the conflict. The meetings resulted in an agreement to continue talks, with reports suggesting that Iran has shown flexibility regarding a proposal to reopen the Strait of Hormuz—contingent upon the lifting of US restrictions within seven days. Meanwhile, Russian President Vladimir Putin is scheduled to meet with Iranian President Masoud Pezeshkian and the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, during an energy summit in Moscow. These developments offer renewed hope for the restoration of stability in global oil supplies.
Nevertheless, geopolitical risks have not entirely subsided. A Saudi-led coalition reported the destruction of three drones over Riyadh following clashes with the Iran-backed Houthi group. Simultaneously, tensions in Lebanon have escalated amid reports that Hezbollah may be preparing for a potential new regional conflict. Although oil shipments from the Middle East have recovered to near pre-war levels, transport costs remain high. This situation indicates that the market continues to account for the risk of sudden supply disruptions, particularly along strategic distribution routes such as the Strait of Hormuz. From a market perspective, Brent crude oil contracts remain in a state of "backwardation"—a condition where the price for near-term delivery contracts is higher than that of subsequent contracts. On Monday, the price spread between the two nearest-term contracts reached approximately US$5 per barrel, an increase from US$3.69 the previous week. This indicates that concerns regarding short-term supply availability remain significant, even as oil prices undergo a correction. Investors are also closely monitoring the Israeli elections on Tuesday, the Federal Reserve’s interest rate decision on Wednesday, and the U.S. midterm elections on November 3—all of which could influence the trajectory of ongoing conflicts and sentiment within the energy market.
Looking ahead, oil price movements are expected to remain volatile as the market grapples with two opposing forces. Diplomatic progress and the restoration of oil flows could pave the way for further price corrections, while new attacks on energy infrastructure or the failure of negotiations could drive prices back up. Although Brent has retreated from its peak, prices remaining above US$115 per barrel suggest that supply risks have not yet dissipated. The market is now waiting to see whether diplomatic efforts will truly yield an agreement or merely serve as a temporary pause before tensions escalate once again.