Oil prices plunge nearly 8% as hopes for U.S.-Iran diplomacy ease fears of renewed supply disruption

Oil prices fell sharply on Monday as signs of possible diplomatic progress between the United States and Iran reduced some of the geopolitical risk premium that had pushed crude higher in recent weeks.

Brent crude fell 7.8% to about $104.63 a barrel, while U.S. West Texas Intermediate dropped 7.3% to around $96.55, according to Financial Times market data.

The selloff accelerated after Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had authorized the government to pursue negotiations with Washington.

Iranian and Qatari officials have held several days of talks aimed at finding a path toward ending the U.S.-Israeli war with Iran, though no breakthrough has been announced and major disagreements remain.

Oil prices had risen sharply in October as traders priced in the risk of renewed U.S. and Israeli strikes on Iran after Tuesday’s U.S. midterm elections and further disruption to shipping through the Strait of Hormuz.

Despite Monday’s decline, energy markets remain highly sensitive to developments in the conflict. Global inventories have been heavily drawn down since the war disrupted Gulf shipping, leaving prices vulnerable to renewed military escalation or further attacks on energy infrastructure.