Oil prices stabilized following their largest drop in more than three months, as both the United States and Iran signaled willingness to advance peace negotiations with the Middle East war now in its ninth month.
WTI crude traded near $96 per barrel after plunging 7.4% on Monday, while Brent crude closed below $105 per barrel. Iran's president stated that the Supreme Leader has authorized his government to conduct further negotiations, and U.S. President Trump hinted that discussions are making progress.
The sharp oil selloff came as American voters head to the polls Tuesday for midterm elections. Trump and Republicans are facing growing political pressure over the war driving up energy prices. Trump has repeatedly said he would resolve the conflict one way or another, while threatening to resume strikes on Iran after the election. When asked by reporters whether he would resume attacks on Iran after the midterms, Trump mouthed "no." Throughout the conflict, he has frequently threatened new strikes and claimed diplomatic progress, but no substantive breakthrough has emerged.
On Monday, the oil price decline rippled across the entire energy market: European natural gas futures fell nearly 9%, and U.S. heating oil posted its largest drop in six months. Karen Young, a senior research scholar at Columbia University's School of International and Public Affairs, said: "Given the current highly tense situation, an energy price decline like Monday's doesn't seem justified. But news is driving market volatility, which means if the U.S. and Israel launch more aggressive military strikes on Iran, energy prices could spike even further."
Before Monday's plunge, global benchmark Brent crude had risen nearly 14% in October, touching a six-month high, driven by concerns over renewed U.S.-Iran hostilities despite some recovery in Persian Gulf exports.
However, the prospect of a diplomatic breakthrough remains uncertain. Iranian President Masoud Pezeshkian did not specify the scope of authority granted by Supreme Leader Mojtaba Khamenei, nor whether it means Iran's red lines in indirect talks with the United States might shift more broadly.
Major differences between the two sides persist. Iran wants the United States to lift its naval blockade on Iranian ports, ease sanctions, and unfreeze assets before fully reopening shipping through the Strait of Hormuz; the United States demands that Iran make concessions on its nuclear program.
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