Eight months into a war that has rattled shipping through the Strait of Hormuz, the oil market has learned to move on headlines about diplomacy. Monday brought one of its larger swings. January Brent futures dropped 4.2% to $108.68 a barrel and December West Texas Intermediate slid 4.3% to $99.61, the Wall Street Journal reported. The decline unwound part of a late-October rally. Brent had closed out October at a multi-month high as traders braced for a possible flare-up after Tuesday's U.S. midterm elections, CNA reported.
The diplomatic track runs through Doha rather than through direct contact between Washington and Tehran. Qatar has taken on the mediating role, and the weekend's sessions produced the first public indication that a written text is under discussion. Iran's delegation has since left Qatar, though messages with Washington still pass through the mediator, two Iranian officials said, and a draft text is circulating with another round of talks under consideration, an official told CNA. Attacks on tankers in the strait have continued even as the talks proceeded, and any agreement would need to address them.
The physical supply picture is mixed. Producers beyond the immediate war zone have kept barrels moving, and the price premium reflects risk to shipping lanes as much as lost output. Saudi Arabia lifted crude exports in October despite Houthi strikes on its energy facilities, and the head of Abu Dhabi's state oil company said global inventories have been drawn down heavily since Hormuz traffic was disrupted, CNA reported. That depletion is why traders watch each round of talks so closely: a settlement would determine how quickly stocks can be rebuilt.
The producer group that sets the baseline for Gulf output has chosen not to react yet. Seven OPEC+ members, including Saudi Arabia and Russia, have been running voluntary cuts since 2023 and review them every month. At a virtual meeting on Sunday they held December output at September's required level and scheduled their next gathering for late November, the group said in a statement. Complete adherence to the Declaration of Cooperation remains a shared goal, the seven added.