Oil prices retreated sharply on Monday as diplomatic efforts to ease tensions between the United States and Iran gained momentum, providing some relief to energy markets after a strong October rally. Brent crude futures, the global benchmark, fell about 3% to trade near $110 a barrel, while West Texas Intermediate (WTI) dropped 3.3% to $100.64.
The decline came as Qatar-mediated discussions between Iranian and US officials continued for a third day, focusing on a potential path to de-escalation and the reopening of the Strait of Hormuz. US Secretary of State Marco Rubio said on Saturday that President Donald Trump prefers a diplomatic resolution, though military action remains an option.
"The president prefers to solve it diplomatically," Rubio told reporters, adding that no final decision has been made on resuming strikes against Iran. Washington remains prepared to use force if necessary, but is open to an agreement that addresses US national security concerns, he said.
Iranian Foreign Minister Abbas Araghchi described the talks as ongoing and progressing, while Tehran has signaled readiness for both diplomacy and defense. Supreme Leader Mojtaba Khamenei warned that any renewed US or Israeli attack would trigger "an immediate and geographically unrestricted response."
Despite Monday's retreat, Brent finished October up roughly 14%, closing near its highest level in six months. Traders remain wary of a possible escalation following the November 3 US midterm elections, with reports suggesting that Washington and Israel have prepared plans for renewed strikes.
Goldman Sachs Raises Oil Price Forecasts
Goldman Sachs has lifted its oil price projections, citing persistent supply risks and the possibility that geopolitical disruptions could extend into 2027. The bank raised its December Brent forecast to $105 a barrel from $90, and its WTI estimate to $94 from $81.
For 2027, Goldman now expects Brent to average $88, up from its previous $80 forecast, with WTI projected at $78 versus $73. The bank also outlined an upside scenario in which Brent could reach $140 and average around $130 in 2027 if Gulf oil production remains 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," Goldman said in a note. The bank added that geopolitical fragmentation, including conflicts in the Middle East and Russia-Ukraine, creates substantial disruption risks that are difficult to predict.
Market participants are closely watching the diplomatic track, as any tangible progress could further ease the risk premium embedded in crude prices. However, the threat of renewed military action and the potential for supply disruptions keep the outlook highly uncertain.
This article is for informational purposes only and does not constitute financial advice.
