Oil Price Today: Brent Steadies Near $105 After 7.6% Plunge on US–Iran Talks

Key Takeaways

• Brent settled 7.63% lower at $104.77 on Monday, while WTI fell 7.36% to $96.46 as diplomatic developments eased concerns about Middle East supply.
• Both benchmarks recovered approximately 0.5% in early Tuesday trading after reports of a US strike on Iran’s Qeshm Island.
• Continuing negotiations and security conditions around the Strait of Hormuz remain central to the oil market’s direction.

Oil Prices Stabilise After Sharp Sell-Off

Oil prices edged higher in early Asian trading on Tuesday, November 3, following a sharp decline in the previous session as investors weighed hopes for a US–Iran agreement against fresh military developments.

Brent crude futures traded at $105.25 per barrel at 01:04 GMT, or 9:04 a.m. Beijing time, up 48 cents, or approximately 0.5%. US West Texas Intermediate crude rose 47 cents, also around 0.5%, to $96.93.

The modest recovery followed Monday’s substantial losses. Brent settled $8.66 lower at $104.77, a decline of 7.63%, while WTI dropped $7.66, or 7.36%, to $96.46.

The two sessions illustrate how quickly changing expectations about diplomacy and regional security are affecting crude prices. Monday’s selling reflected greater optimism about negotiations; Tuesday’s recovery showed that investors remained sensitive to the possibility of renewed disruption.

US–Iran Diplomacy Reduces Supply Fears

Monday’s decline followed signs that diplomatic engagement could offer a path towards easing the conflict.

Iranian President Masoud Pezeshkian said the country’s leadership had granted the government authority to pursue peace talks. US President Donald Trump also indicated that an agreement with Tehran remained possible.

Negotiations involving Qatari mediators helped strengthen expectations that a settlement could reduce risks to oil production and shipping. However, the diplomatic process had not produced a confirmed breakthrough.

For the oil market, the significance extends beyond the prospect of an agreement itself. A credible reduction in hostilities could improve confidence in the reliability of regional exports, encouraging traders to reduce the additional price they are willing to pay for protection against supply disruption.

That additional cost is often described as a geopolitical risk premium. It can decline before physical oil flows improve if investors believe disruption has become less likely.

Monday’s price movement therefore reflected a change in expectations. It did not establish that shipping conditions had already returned to normal or that a lasting settlement had been reached.

Qeshm Island Strike Report Prompts a Partial Recovery

The market’s tone shifted during early Tuesday trading after reports that the United States had struck Iran’s Qeshm Island.

The reported military activity raised fresh concerns about the security of commercial shipping and the risk of further escalation. The island’s location near the Strait of Hormuz makes developments there particularly relevant to energy markets.

The reports helped restore some supply-risk premium, although the initial recovery in crude was small compared with Monday’s losses.

Separate reporting cited a US official describing limited defensive strikes on Iranian targets around the strait. The official said the action followed Iranian use of surface-to-air missiles against US assets. Diplomatic efforts were continuing alongside the military activity.

The combination leaves the outlook uncertain. Negotiations can continue while security risks remain elevated, and a military incident does not by itself establish that diplomacy has ended.

For market participants, the practical issue is whether further developments affect the movement of oil, the safety of tankers or confidence in a negotiated outcome.

Strait of Hormuz Remains the Main Supply Focus

The Strait of Hormuz remains a critical connection between Gulf energy producers and international buyers.

Disruption can affect the availability and timing of cargoes even when production facilities continue operating. Shipping delays, restrictions or concerns over vessel safety can therefore influence oil prices independently of changes in demand.

Recent negotiations have included proposals concerning the reopening of the waterway, restrictions on Iranian ports and sanctions. Iran has maintained that further progress depends on its conditions being met, leaving important differences unresolved.

A durable improvement in shipping security would provide stronger evidence of easing supply pressure than diplomatic statements alone.

Conversely, further incidents involving commercial vessels or military activity near export routes could undermine confidence and reverse part of the recent decline.

This distinction helps explain why crude can fall sharply on encouraging negotiations and then recover when security concerns return. Prices reflect both current supply conditions and expectations about future availability.

Falling Crude Prices Offer Some Inflation Relief

Lower oil prices could ease pressure on fuel costs and inflation if the decline persists.

Crude is an important input for transport, manufacturing and distribution. A sustained reduction in energy costs can therefore influence business expenses and consumer prices across several sectors.

The effect is neither immediate nor uniform. Retail fuel prices also depend on refining margins, taxes, distribution costs and local pricing arrangements. One sharp trading session does not guarantee a comparable decline at the pump.

The same caution applies to the wider economic implications. A durable easing of supply concerns would provide a firmer basis for assessing inflation than a temporary adjustment driven by diplomatic headlines.

For now, the oil market is signalling that expectations have improved, while retaining a meaningful sensitivity to renewed disruption.

Oil Outlook Depends on Tangible Diplomatic Progress

The next direction for Brent and WTI will depend heavily on whether negotiations produce verifiable changes in security and oil flows.

Further progress towards an agreement could encourage investors to remove more of the supply-risk premium. A renewed escalation, disruption to shipping or deterioration in talks could have the opposite effect.

Monday’s settlement levels of $104.77 for Brent and $96.46 for WTI provide reference points for the scale of the sell-off, rather than confirmed technical support levels.

Tuesday’s partial recovery suggests that investors are balancing a more hopeful diplomatic outlook with continuing operational risks. Until an agreement delivers sustained improvements in regional security, oil prices are likely to remain sensitive to developments around the Strait of Hormuz.

Get a generous deposit bonus on your first trade with Markets.com. Hurry—claim yours today!