Oil traders on Monday once again bet on the integrity and good will of Iranian leaders by causing a massive 7 percent-plus drop in crude prices, after Tehran claimed that mediation to end the eight-month war with the U.S. was progressing.
By mid-session, Brent dropped by 7.7 percent to $104.66 per barrel and West Texas Intermediate plummeted 7.3 percent to $96.50 after Iranian foreign minister Abbas Araghchi told state media, “Consultations through mediators are very intensive; we have presented our conditions and proposals and everything depends on the political rationality of Washington.”
Also, Iran’s supreme leader, Mojtaba Khamenei, reportedly granted “powers” on Monday to his government in its talks with the U.S. seeking to end hostilities.
This caused pundits such as Chris Beauchamp, the chief market analyst at the IG trading platform, to remark, “The news is manna from heaven for stock markets, which have felt increasingly pressured by oil’s rise, but of course there is still a risk that Trump will try one last throw of the iron dice after the midterms.”
But reason for analytical optimism remained baffling, considering Tehran has insisted that any agreement to end the war hinges on the U.S.’s acceptance of seven conditions, including lifting the U.S. blockade against Iran, withdrawal of U.S. forces, war damage compensation, release of frozen assets, and a halt to U.S. threats and insults – conditions Washington have already largely rejected.
Also, Khamenei met with Iran’s military chiefs over the weekend and said the response to “any kind and level of threat” from the U.S. or Israel should be immediate and without “geographic limits,” and urged an expansion of the list of potential targets.
Pavel Molchanov, analyst at Raymond James, offered a welcome dose of skepticism amid Monday’s trading by remarking that suspicion about any kind of peace deal was warranted after many "false dawns” over the past several months.
Meanwhile, although Saudi Arabia's crude exports increased in October from September despite attacks from Iran-backed Houthies, Goldman Sachs warned that Brent could jump to $140 in 2027 if Gulf oil output remains 3.5 million barrels per day below its 2025 average: "Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside."
In other oil news on Monday, Ukraine once more helped to complicate the global crude supply chain by having hit no less than three Russian refineries since Friday, the latest causing a fire at the Samara crude pumping station in Russia’s Volga region.
Drone attacks also hit a Rosneft refinery in the Bashkortostan region, as well as Lukoil’s Kstovo oil refinery in Nizhny Novgorod.
