Oil prices dropped sharply on Monday, with Brent crude futures for January delivery falling 4.7% to $93.68 a barrel by 14:11 GMT, compared with Friday's settlement of $98.32. The contract touched an intraday low of $93.32, just above the two-month low of $93.22 reached last week. US West Texas Intermediate (WTI) futures for December slid 4.3% to $86.91 from $90.83, after dipping to $86.50.
The decline accelerated as Qatar's Prime Minister and Foreign Minister, Sheikh Mohammed bin Abdulrahman Al Thani, traveled to Washington to meet President Donald Trump and Vice President JD Vance. According to Reuters, he carried an Iranian proposal for an interim agreement to reopen the Strait of Hormuz. Under the reported terms, Iran would halt attacks on Gulf tankers and reopen the waterway, while Washington would lift its blockade of Iran and release $8 billion in frozen Iranian funds held in Qatar. Neither government has confirmed these details.
Supply surplus adds to bearish pressure
Beyond geopolitics, supply-side factors are weighing on prices. JPMorgan estimated on Friday that the global oil market ran a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October. "Weakness in the physical market, supported by still-elevated flows out of the Middle East, is one factor weighing on prices," UBS analyst Giovanni Staunovo said, according to Reuters.
The move extends a steep selloff. Brent lost more than 16% last week, its biggest weekly decline since April 2020, after falling below $100 on Wednesday. Earlier on Monday, Brent was down less than 1% on fresh attacks near the Strait of Hormuz, but the prospect of a diplomatic breakthrough triggered a sharper drop.
Deal remains uncertain
A deal is far from assured. Secretary of State Marco Rubio on Sunday called Tehran's demands "outrageous and ridiculous." Attacks have continued: a tanker leaving Hormuz was hit by an unknown projectile over the weekend, UK Maritime Trade Operations said, and Yemen's Houthis damaged Saudi Aramco's offices in Riyadh.
Jorge Leon, head of geopolitical analysis at Rystad Energy, warned the move could unwind. "If we see renewed escalation, much of last week's oil price decline could quickly reverse," he said in a Bloomberg report. On Sunday, Trump said fresh US strikes on Iran were "highly unlikely" as long as talks progressed.
What to watch
After the White House meeting, traders will focus on monthly reports from the EIA on Tuesday, OPEC on Wednesday and the IEA on Friday. These will provide updated views on supply and demand balances. Brent and WTI are swinging several dollars a day on headlines from Washington, Doha and Tehran, and a single statement on Hormuz could reverse Monday's move. Investors should monitor official confirmations and any signs of renewed military activity.
This article is for informational purposes only and does not constitute financial advice.
