West Texas Intermediate (WTI) crude futures for December delivery tumbled below the $100 mark on Monday, shedding 6.5% to trade at $97.32 a barrel by 14:41 GMT. The decline came as diplomatic efforts to resolve the Iran conflict gained momentum, with Secretary of State Marco Rubio indicating that President Trump would prefer a peaceful resolution.
Brent crude, the international benchmark, also fell sharply, dropping 6.3% to $106.30 a barrel for January delivery. Both benchmarks had closed Friday at their highest levels since late April, but Monday's slide erased those gains and pushed prices to their lowest in over a week.
Diplomacy Drives the Slide
The sell-off was fueled by reports of ongoing talks between Iranian negotiators and Qatari mediators in Doha. A draft proposal is being circulated, with a follow-up meeting possible, according to an official briefed on the discussions. Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had granted the government "certain authorities" for peace talks, which sent prices to their session lows.
Foreign Minister Abbas Araghchi added that an agreement with the US is possible if Washington "demonstrates goodwill," according to state news agency IRNA. Tehran is seeking the lifting of sanctions and the removal of the US blockade.
Market Reaction and Context
WTI first slipped under $100 during European trading, and the decline deepened around 13:30 GMT. The December contract settled at $99.90 on October 27, so this is not the first time it has dipped below that level recently. However, at $97.32, WTI is trading at its lowest since October 21, when it settled at $97.15.
If the losses hold, Monday would mark the biggest one-day percentage fall for the December contract this year. The Brent-WTI spread stands at about $9 a barrel.
The move reflects the significant war-risk premium that had built into prices ahead of Tuesday's US midterm elections, with traders fearing an escalation of the conflict. "The oil market is still reacting with extreme sensitivity to every headline out of the Middle East," said Giovanni Staunovo, an analyst at UBS.
Energy Stocks and ETFs Follow Crude Lower
Oil producers declined in tandem with crude prices. Exxon Mobil was down 3% at $181.67, while Chevron fell 2.4% to $229.93. The United States Oil Fund (USO), an exchange-traded fund tracking WTI futures, dropped 6.1%. The broader market, however, took the drop in energy costs in stride, with the S&P 500 up 0.6%.
What's Next for Oil Prices?
Despite the diplomatic optimism, risks remain. Attacks on tankers in the Strait of Hormuz and on Saudi energy sites by Yemen's Houthis have continued in recent weeks. "Attacks on ships and refineries in the Middle East and on civilians in Ukraine continue, doing little to inspire confidence in the prospects for lasting ceasefires in the foreseeable future," said Tamas Varga, an analyst at PVM Oil Associates.
The world has drained nearly 1 billion barrels from inventories since the war disrupted shipping through Hormuz, according to ADNOC chief executive Sultan Al Jaber. A daily settlement back above $100 would suggest traders doubt a deal, while a signed framework could push WTI further from that line.
Key events to watch include the US midterm elections on Tuesday, any follow-up round of Qatar-mediated talks, and the EIA weekly inventory data on Wednesday.
This article is for informational purposes only and does not constitute financial advice.
