Oil prices fell to a session low on Monday on news that both the United States and Iran are pursuing diplomacy, CNBC reported, easing some concern over the Middle East conflict.
The decline follows a week of swings tied to diplomacy. CNBC reported last Thursday that prospects of renewed peace negotiations eased supply fears, and on Oct. 27 that renewed efforts to end the U.S.-Israeli war with Iran pushed prices lower.
Prices remain well above where they stood before the war. Al Jazeera reported Friday that Brent crude, the global benchmark, was trading at its highest level since April, more than 60 per cent above pre-war levels. December-delivery Brent futures rose more than 2 per cent that day to briefly top $117 a barrel.
Gulf crude exports averaged 24.6 million barrels per day in the week to Oct. 18, above the pre-war average, according to market intelligence firm Kpler. Shipping lines have set up ship-to-ship transfers off Oman and the United Arab Emirates so that vessels spend less time in dangerous waters near the Strait of Hormuz, and Kpler said more than 70 per cent of crude crossing the strait in August moved that way.
Pipelines that avoid the strait are also carrying more oil. Kpler data show 40 per cent of Gulf exports bypassed the strait as of September, compared with 17 per cent before the war.
Pavel Molchanov, an investment strategist at Raymond James & Associates, questioned whether production has recovered. He cited International Energy Agency data showing OPEC Gulf output of 15.8 million barrels per day in September, or 75 per cent of the pre-war baseline. The agency also said global stockpiles were 509 million barrels below pre-war levels after a 10-million-barrel drop in September.
Moving oil has become far more expensive. London Stock Exchange Group data show freight reached as high as $40 a barrel in recent weeks, roughly 10 times normal, driven by higher insurance premiums and logistical problems. The United Kingdom Maritime Trade Operations logged 32 attacks on commercial vessels in October as of Friday, the most for any month since the war began.
“So barrels are moving, but neither smoothly nor reliably. That should not be read as a sign of normalisation,” said Isabel Figuerola-Ferretti, an oil markets expert at Comillas Pontifical University in Madrid.
Brent futures for October 2027 delivery were above $90 a barrel on Friday. Figuerola-Ferretti said a return to $70 would require durable de-escalation, normal transit through Hormuz, rebuilt inventories and normal freight costs. Molchanov said supply is unlikely to exceed 85 per cent of pre-war levels without a permanent diplomatic solution.
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