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Global oil prices declined on Monday as renewed diplomatic efforts to end the US-Israeli war on Iran raised hopes of easing tensions in the Middle East and restoring disrupted energy supplies.
Brent crude futures, the international benchmark, fell by $1.59, or 1.4 per cent, to $111.84 per barrel. US West Texas Intermediate (WTI) crude also dropped by $1.56, or 1.5 per cent, to $102.56 per barrel in early Asian trading.
The decline came as Iranian and Qatari officials continued discussions for a third consecutive day, seeking an agreement to end the conflict.
The talks have raised hopes that disruptions to oil supplies from the Middle East could gradually ease.
Iranian Foreign Minister Abbas Araqchi said on Sunday that the ongoing discussions were aimed at continuing consultations with Qatari mediators.
He also said Tehran remained prepared for both diplomacy and defence.
Oil prices had ended October at their highest level in six months amid concerns that the conflict between Iran and the United States could escalate further following Tuesday’s US midterm elections.
However, analysts said expectations of diplomatic progress, alongside the absence of any major military escalation over the weekend, had eased some immediate concerns in the oil market.
Despite the decline, uncertainty remains over global energy supplies, particularly due to attacks on oil tankers passing through the strategically important Strait of Hormuz.
Disruptions to shipping through the waterway have increased energy and transportation costs worldwide.
Meanwhile, Saudi Arabia increased its crude oil exports in October compared with September despite attacks on its energy infrastructure by Yemen’s Iran-aligned Houthi group, according to shipping data.
Separately, the Organisation of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, decided to keep their December oil production targets unchanged, amid continuing supply disruptions linked to the conflict.
Analysts have warned that oil prices could rise again if tensions between Washington and Tehran intensify after the US midterm elections.
Some market observers have indicated that Brent crude could approach $120 per barrel if geopolitical risks increase.
The future direction of global oil prices will largely depend on diplomatic progress, developments in the Middle East and the restoration of normal oil shipments through the Strait of Hormuz.
