U.S. crude oil falls below $95 per barrel as market hopes for diplomatic resolution to Iran war
The rebound in oil prices come a day after the U.S. and Iranian presidents signalled they are open to a diplomatic solution to Iran war.
Key points
- Brent crude fell 3% to $101.54 and WTI dropped 2.3% to $94.23 on Tuesday.
- Oil fell more than 7% on Monday as Washington and Tehran signaled openness to talks.
- The U.S. attacked Iran's Qeshm Island on Monday, U.S. officials told The Wall Street Journal.
Crude oil prices fell for a second straight session on Tuesday as the market hoped the U.S. and Iran would reach a diplomatic settlement to the eight-month-long conflict that has disrupted global energy supplies. Brent crude was down 3% at $101.54 per barrel, while West Texas Intermediate was 2.3% lower at $94.23, after rumors circulated that the two sides were making progress toward a deal.
Prices had sold off more than 7% on Monday after Washington and Tehran both signaled they were open to discussions on a settlement. Oil had gained more than 10% in October as the market priced in the risk of escalation after the U.S. midterm elections.
Strikes continue despite talks
The risk of escalation persists. U.S. officials told The Wall Street Journal that Washington attacked Iran's Qeshm Island on Monday and has carried out "limited strikes" against the country in recent weeks. The report, quoting an unnamed official, said the campaign has been kept deliberately low-profile to avoid signaling plans for a major escalation.
The president and I both feel really good about the prospect of potentially coming to a negotiated settlement.
— Vice President JD Vance
Officials on a settlement
The Trump administration has also been touting a possible diplomatic solution. Vice President JD Vance told CNN, "The president and I both feel really good about the prospect of potentially coming to a negotiated settlement." On Sunday, Secretary of State Marco Rubio said President Donald Trump would like to resolve the Iranian war "diplomatically" and prefers not to use military force.
High oil prices have contributed substantially to U.S. inflation and high gasoline prices, a concern for Trump ahead of the midterm elections. Last week, two Federal Reserve presidents said interest rates will need to move higher to rein in inflation.
