- Crude oil prices fell further after nearly 8% drop in the previous session on Nov 3
- Brent crude traded at $104.50, down 0.24%, following a steep 7.6% fall on Nov 2
- US-Iran diplomatic talks raised hopes, easing fears of supply disruptions and conflict
After tumbling nearly 8% in the previous session, crude oil prices extended their decline on Tuesday, November 3, as hopes of progress in US-Iran diplomatic negotiations eased concerns over further disruptions to global energy supplies.
When last checked, Brent crude futures were trading at $104.50 per barrel, down 0.24% during the session.
Meanwhile, the international benchmark had settled at $104.77 on Monday, registering a 7.6% decline, its steepest single-day fall since the recent escalation in the conflict. US West Texas Intermediate (WTI) crude futures dropped 7.4% to settle at $96.46 per barrel, marking their biggest daily decline since July 27.
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The sell-off followed signals from both Washington and Tehran that a diplomatic resolution to the eight-month conflict could be possible. US President Donald Trump reportedly said that Iran wanted to "make a deal and that could happen", while Iranian President Masoud Pezeshkian indicated that Tehran was willing to pursue negotiations.
On the other hand, Pezeshkian said Iran's government had received additional authority from Supreme Leader Ayatollah Mojtaba Khamenei to pursue diplomatic efforts. Iranian Foreign Minister Abbas Araghchi also said an agreement with Washington remained possible, provided the US demonstrated goodwill and was genuinely committed to a peaceful resolution, according to state-owned Islamic Republic News Agency (IRNA).
READ | Iran Supreme Leader Gives Nod For US Peace Talks; Brent Crude Plunges To $106
Araghchi said mediators were discussing a proposal previously put forward by Tehran during the United Nations General Assembly in September. Iran's demands include the lifting of US sanctions, a reduction in American military presence in the region to earlier levels and an end to the blockade.
Why Are Oil Prices Falling?
The fresh developments have eased concerns that Washington could resume military action against Iran, particularly after the US midterm elections. Markets had factored in the possibility of further escalation once the elections were over, contributing to a more than 10% rally in oil prices during October.
Trump has previously indicated that he would not launch an attack on Iran before the midterm elections. US Secretary of State Marco Rubio has also said that the administration prefers a diplomatic solution over further military action.
The developments come as the Trump administration and the Republican Party face political pressure over higher energy costs stemming from the conflict. The disruption to oil supplies and fears surrounding the security of key shipping routes have kept crude prices elevated in recent months.
However, the latest decline comes with a caveat. Oil markets have seen similar sell-offs during previous phases of the conflict on expectations of a diplomatic breakthrough, only for tensions to subsequently intensify and push prices higher again.
READ | Freight Shock: Indian Refiners Face Up To $20/Barrel Shipping Bill, Margins Hit
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