By: Isuru Parakrama
November 02, World (LNW): International crude oil prices edged lower by more than 1 per cent on Monday as renewed diplomatic engagement between Iranian and Qatari officials raised hopes of a possible breakthrough in efforts to bring the ongoing US-Israeli conflict with Iran to an end.
Brent crude futures dropped by US$1.59, representing a decline of 1.40 per cent, to trade at US$111.84 a barrel. Meanwhile, US West Texas Intermediate (WTI) crude fell US$1.56, or 1.50 per cent, to US$102.56 a barrel by 0011 GMT.
The decline came after oil benchmarks recorded substantial gains during the previous week, with Brent closing October at its strongest level in six months. Concerns over a possible escalation of hostilities following the US midterm elections had previously contributed to the upward movement in prices.
Market analysts attributed Monday’s decline partly to profit-taking after the recent rally, alongside expectations that diplomatic channels could help prevent further deterioration in the situation.
Tim Waterer, chief market analyst at KCM Trade, observed that the market was experiencing a correction following last week’s strong performance. He noted that the continuation of negotiations and the absence of any major military developments over the weekend had eased some of the immediate concerns surrounding supply disruptions.
Nevertheless, he cautioned that uncertainty remained considerable, particularly given the possibility of renewed tensions involving Iran. A further escalation in political rhetoric or military activity could push Brent crude towards US$120 a barrel, he warned.
Diplomatic discussions between Tehran and Doha continued for a third consecutive day, with Iranian Foreign Minister Abbas Araqchi describing the engagement as ongoing and productive. He said the discussions were intended to maintain consultations with Qatari mediators, while emphasising that Iran remained prepared to pursue both diplomatic and defensive options.
Meanwhile, concerns over the security of international energy supplies continue to weigh heavily on the market. Attacks on commercial vessels travelling through the Strait of Hormuz, one of the world’s most strategically important oil shipping routes, have added to transportation expenses and heightened uncertainty across global energy markets.
Saudi Arabia also increased its crude oil exports in October compared with the previous month, despite attacks attributed to Iran-aligned Houthi forces in Yemen against its energy infrastructure, according to reports from two ship-tracking agencies.
Separately, the Organisation of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have decided to maintain their existing production targets for December.
The decision was largely in line with market expectations, with the group indicating that further adjustments to its production policy are unlikely before next year. Export difficulties linked to the conflict have continued to complicate supply arrangements among member countries.
With diplomatic negotiations, shipping security and regional military developments all influencing market sentiment, oil prices are likely to remain sensitive to events in the Middle East. Any significant change in the conflict could have immediate consequences for energy costs, international trade and the wider global economy.
