Oil drops almost 4% on hopes of progress in talks on ending US-Iran war
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LONDON, Nov 2 : Oil fell nearly 4 per cent on Monday as talks between Iranian and Qatari officials on a deal to end the US-Israeli war on Iran raised hopes that Middle East supply disruptions could ease.
Iranian negotiators left Doha talks on Sunday, but not due to difficulties in negotiations, an official briefed on the meeting told Reuters on Monday.
"The new month brought with it renewed hopes of a breakthrough in the Iranian stalemate," said Tamas Varga of oil broker PVM.
Brent crude futures fell $4.20, or 3.7 per cent, to $109.23 a barrel by 0900 GMT while US West Texas Intermediate crude traded at $100.14, down $3.98, or 3.8 per cent.
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Brent ended October at its highest in six months amid concerns that the US-Iran conflict could escalate again after Tuesday's US midterm elections.
"Lingering hopes of some form of diplomatic progress, combined with the absence of any meaningful military escalation over the weekend, have taken some of the immediate heat out of prices for now," said Tim Waterer, chief market analyst at KCM Trade.
Iranian Foreign Minister Abbas Araqchi said on Sunday that the purpose of the "ongoing and progressing" talks was to continue consultations with the Qatari mediators, adding Tehran was prepared for "both defence and diplomacy".
The talks follow a recent increase in attacks on oil tankers transiting the Strait of Hormuz, although there are also signs of shipments rising from some major exporters.
In October, Saudi Arabia increased crude exports versus September despite attacks by the Iran-aligned Yemeni Houthis on its energy infrastructure, two of three ship-tracking companies said.
The outbreak of the Iran war at the end of February has depleted oil stocks. The world has drained nearly 1 billion oil barrels from inventories since the war disrupted shipping through the Strait of Hormuz, the CEO of Abu Dhabi's state-owned oil company ADNOC said.
Oil could still rise further, some analysts say. Goldman Sachs raised its oil price forecasts on Sunday due to elevated supply risks and said Brent could jump to $140 in 2027 if Gulf oil output stays 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 report.
(Addiitonal reporting by Florence Tan and Trixie Yap; Editing by Saad Sayeed)
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