Monitoring Report
ISLAMABAD: Global oil prices fell more than 3% on Monday as hopes of diplomatic progress towards ending the US-Israeli war on Iran eased immediate concerns over potential supply disruptions in the international energy market.
Brent crude futures declined by $3.68, or 3.2%, to $109.75 per barrel, while US West Texas Intermediate (WTI) crude dropped by $3.43, or 3.3%, to $100.69 per barrel by 0407 GMT.
The decline followed three consecutive days of discussions involving Iranian and Qatari officials aimed at facilitating an agreement to end the conflict. The talks have raised hopes of diplomatic progress and reduced some of the geopolitical risk premium in oil prices.
Tim Waterer, chief market analyst at KCM Trade, said oil prices were experiencing a technical correction following strong gains last week. He noted that hopes of diplomatic progress, alongside the absence of significant military escalation over the weekend, had eased immediate upward pressure on prices.
However, market concerns over a possible escalation in tensions remain. Waterer cautioned that renewed rhetoric surrounding Iran could push Brent crude prices towards $120 per barrel following Tuesday’s US midterm elections.
Iranian Foreign Minister Abbas Araqchi said on Sunday that the ongoing talks were aimed at continuing consultations with Qatari mediators. He described the discussions as progressing and said Tehran remained prepared for both defence and diplomacy.
Meanwhile, attacks on oil tankers transiting the strategically important Strait of Hormuz have continued to increase global energy and shipping costs, keeping supply security concerns in focus.
Despite the security risks, Saudi Arabia increased its crude oil exports in October compared with September, even as Yemen’s Houthi attacks targeted its energy infrastructure, according to two of the three ship-tracking companies cited in market reports.
ING analysts said recent oil price movements reflected growing market concerns about the possibility of further hostilities between the United States and Iran. They noted that if the US midterm elections passed without either military strikes or a diplomatic agreement, the market would reassess whether to maintain the substantial geopolitical risk premium or gradually reduce it.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, maintained their December oil production targets unchanged at Sunday’s meeting.
The decision was in line with market expectations, with the group signalling that further production policy adjustments would not take place until next year, as export disruptions linked to the Iran war continue to affect the global oil market.