DTN Oil Update
WTI Tests $85 as U.S.-Iran De-Escalation Seen
SECAUCUS, N.J. (DTN) -- Crude oil futures hit three-month lows on Monday as energy traders priced in a rapidly unwinding geopolitical risk premium following signals of cooling military escalation between the U.S. and Iran.
NYMEX WTI crude for December delivery fell $3.98, or 4.38%, to settle at $86.85 a barrel of crude oil (bbl), after falling earlier to $85.02 - a level not seen since August. ICE Brent crude for January delivery dropped $5.75, or 5.85%, to close at $92.57 bbl, off a session low of $90.56.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Downstream refined products mirrored the weakness across the energy complex. NYMEX ultra-low sulfur diesel (ULSD) for December delivery eased $0.1169, or 2.70%, to finish at $4.2148 gallon after a drop to $4.1502. NYMEX reformulated gasoline blendstock for oxygenate blending (RBOB) retreated $0.1258, or 4.53%, to end at $2.6509 gallon for the December contract, following a session bottom at $2.6144.
The sell-off accelerated after U.S. President Donald Trump indicated over the weekend that he was "highly unlikely" to order new military strikes on Iran while diplomatic negotiations progress. The comments, marking a sharp pivot from pre-election rhetoric, added to bearish sentiment triggered by last week's U.S. midterm election outcome, in which Democrats secured control of both houses of Congress.
The broader market focus shifted back toward physical supply fundamentals, where global crude balances face surplus pressures estimated by institutional analysts at 1.4 million barrels per day (bpd).
Broader macroeconomic headwinds and a softening U.S. dollar failed to stem the slide, as the U.S. Dollar Index slid 0.644 points, or 0.63%, to 101.535 against a basket of foreign currencies.
On the diplomatic front, a Qatari delegation submitted Tehran's latest proposal in person on Monday, though officials in both Doha and Washington dampened expectations of an immediate breakthrough, noting that talks remain ongoing. Iranian Foreign Minister Abbas Araghchi reaffirmed that while proposals are moving through regional channels, formal agreement has not been reached.
Despite the drop in futures, maritime security risks across the Persian Gulf and the Strait of Hormuz continue to disrupt regional logistics. Maritime insurance rates for Strait of Hormuz transits remain elevated at 6% to 10% of hull value, maintaining shipping costs for standard crude tankers at $6 million to $10 million per voyage.
Traders are now awaiting a series of major monthly reports scheduled for release later this week, including the U.S. Energy Information Administration's Short-Term Energy Outlook on Tuesday, the OPEC Monthly Oil Market Report on Wednesday, and the International Energy Agency's Oil Market Report on Friday.
(c) Copyright 2026 DTN, LLC. All rights reserved.