If you've winced at the gas pump lately, Monday morning brought a little bit of hope. Oil prices slid more than 3% as talks aimed at ending the U.S. - Israeli war on Iran entered a third straight day. Brent crude, the global benchmark, fell $3.68 to about $109.75 a barrel early Monday, and U.S. crude dropped $3.43 to around $100.69, Reuters reported. A bit later, TheStreet had U.S. crude down more than 4% at $99.35.
Iranian and Qatari officials are talking, with Qatar acting as the go-between. Iran's foreign minister, Abbas Araqchi, said Sunday that the discussions were ongoing and making progress, while adding that Tehran is ready for both defence and diplomacy. So, hopeful but cautious.
Why does this matter so much to markets? The war has hit energy shipping hard. Tankers passing through the Strait of Hormuz have been attacked, pushing up the cost of moving oil around the world. Brent finished October at its highest level in six months. Even small signs of peace can knock a lot off prices loaded with fear.
Not everyone thinks the drop will last. Tim Waterer at KCM Trade called it a technical pullback after last week's big gains. He warned that tough talk around Iran after Tuesday's U.S. midterm elections could send Brent toward $120. Analysts at ING are asking the same thing: if the midterms pass with no strikes and no deal, does all that risk premium start to fade?
Meanwhile, OPEC+ kept its December production targets unchanged on Sunday and doesn't plan more changes until next year.
Image Credits: Yahoo News
