Oil prices recorded their largest decline in three months after both the United States and Iran indicated a willingness to negotiate, a conflict that has been disrupting energy supplies in the Middle East.
WTI fell 7.4%, settling at nearly $96.5 per barrel. According to the Islamic Republic News Agency (IRNA), Iran's Supreme Leader has authorized the government to engage in negotiations. Prices had already been falling following reports that U.S. President Trump told Israeli Prime Minister Netanyahu he wanted to allow talks with Iran to move forward.
The decline rippled across the entire energy market, with European benchmark natural gas futures dropping nearly 11% at one point, while U.S. heating oil posted its largest drop in six months. Restricted supply from the Persian Gulf, combined with Ukraine's intensified attacks on Russian refineries, had driven fuel prices higher in recent months.
"A large risk premium in crude oil and European natural gas is fading," said Darrell Fletcher, Commodities Managing Director at Bannockburn Capital Markets. "Ironically, this is happening right before the midterm elections."
Political pressure on Trump to end the war has intensified, but any relief from Monday's price drop came too late to ease the burden that earlier high oil prices placed on drivers.
Technical factors also amplified the selloff. Data from Kpler's Bridgeton Research Group showed that trend-following commodity trading advisors cut their Brent long positions from 100% at the open to 91%.
December-delivery WTI fell 7.4%, settling at $96.46 per barrel, while January-delivery Brent dropped 7.6%, settling at $104.77 per barrel.
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