DTN Oil Update
Oil Sinks 6% as Hormuz Diplomacy Gathers Momentum
SECAUCUS, N.J. (DTN) -- Crude oil futures tumbled 6% Monday morning as talks between Iranian negotiators and Qatari mediators sparked hopes for a diplomatic deal to halt the U.S.-Israeli military campaign against Iran, easing immediate risk premiums across the energy complex.
By 9:12 a.m. EST, NYMEX WTI crude for December delivery fell $6.58, or 6.34%, to $97.54 bbl. The session low was $97.12.
ICE Brent for January delivery moved down $6.85, or 6.02%, to $106.58 bbl after an intraday bottom at $105.86.
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Both WTI and Brent ended October trading up 15% on Friday, their highest since July, on fears that military operations could re-escalate in the Strait of Hormuz following the U.S. midterm elections on Tuesday, Nov. 3.
Despite Monday's selloff, major financial institutions warn that upside risk remains significant. Market participants noted that while talks continue in Doha, the underlying market remains tightly balanced due to depleted inventories and maritime security threats.
"Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside," Goldman Sachs said in a note, raising its Brent forecast to $140 bbl by 2027 if Middle East production remained constrained by 3.5 million bpd below 2025 baseline levels.
Among refined products, NYMEX ULSD for December delivery eased $0.1976, or 4.29%, to $4.4785 gallon. It fell to as low as $4.4264 earlier.
RBOB for December retreated $0.1936, or 6.16%, to $2.9629 gallon. The bottom for the day was $2.9356.
The U.S. Dollar Index slid 0.275 points to 101.470 against a basket of currencies.
The retreat in crude and product futures came as Iranian Foreign Minister Abbas Araqchi confirmed Sunday that Tehran remains engaged in consultations with Qatari intermediaries, emphasizing that Iran is fully prepared for "both defense and diplomacy" as discussions proceed.
The diplomatic push follows an elevated concentration of attacks on commercial tankers attempting passage through the Strait of Hormuz, though regional trade flows have shown mixed signals.
Ship-tracking data indicated that Saudi Arabia managed to increase crude export volumes in October relative to September, even as Iran-aligned Houthi forces launched repeated strikes against kingdom energy infrastructure.
Global petroleum inventories have taken a severe hit since hostilities erupted in late February, with total commercial and strategic stocks draining by nearly 1 billion bbl as Strait of Hormuz transport bottlenecks persisted.
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