Oil prices slide as U.S.-Iran diplomacy gains momentum

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Oil prices slide

Highlights

Brent fell 2.57%, while WTI declined 2.01%.
The U.S. and Iran are reviewing new peace proposals.
Reported strikes on Qeshm threaten fragile diplomacy.

Brent crude futures fell 2.57% to $102.08 a barrel, while WTI futures declined 2.01% to $94.52. The latest moves followed a sharp selloff on Monday as investors reassessed the likelihood of renewed fighting. Both governments are considering new proposals from Qatari mediators as diplomatic efforts continue, according to Bloomberg.

Qatar mediation continues after reported U.S. strikes

Qatari mediators traveled to Tehran on Monday for discussions with Iranian officials before returning later that day. The talks were described as constructive, with Washington and Tehran reviewing proposals intended to narrow their differences. Iran's parliament speaker, Mohammad Bagher Ghalibaf, indicated that Tehran had delivered its response and was awaiting further action from the U.S.

The diplomatic activity continued despite reports of American strikes on targets on Iran's Qeshm Island, near the Strait of Hormuz. The operations were described as limited actions intended to protect commercial shipping, including a reported response to Iranian fire directed at a U.S. aircraft. Washington has not publicly confirmed the strikes, leaving important details unresolved.

Washington and Tehran signal interest in negotiations

President Donald Trump has suggested that an agreement remains possible, even as his administration maintains the option of further military action. The diplomatic effort comes ahead of Tuesday's U.S. midterm elections, with higher fuel prices adding pressure on the White House. Israeli Prime Minister Benjamin Netanyahu has meanwhile advocated a tougher approach toward Iran.

Iranian President Masoud Pezeshkian said Supreme Leader Mojtaba Khamenei had granted the government additional authority to pursue negotiations. The extent of those powers remains unclear, and substantial disagreements persist. Previous attempts to establish a lasting settlement have failed, including a June understanding that collapsed within weeks.

Oil markets weigh diplomatic progress against supply risks

The Strait of Hormuz remains central to the market outlook because disruptions there can affect crude oil and liquefied natural gas shipments. Earlier fighting restricted shipping and pushed energy prices higher, while the subsequent ceasefire failed to eliminate the risk of further attacks. Continued diplomatic engagement has reduced immediate concerns about a broader conflict.

However, negotiations have yet to produce a lasting agreement, and reported military activity shows how quickly tensions could return. Traders are monitoring whether the U.S. and Iran can reach terms that protect shipping and prevent another escalation. Until then, oil markets remain exposed to sudden changes in diplomatic and military developments.

We also reported gold prices retreat as Iran tensions push oil higher.

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