WTI slides over 5% as traders respond positively to US-Iran diplomatic efforts

• WTI Oil falls more than 5% under pressure from US-Iran diplomatic progress.
• Reopening the Strait of Hormuz requires the US to meet Iran’s demands, Tehran says.
• Attention remains on Strait of Hormuz shipping risks and the uncertain prospect of US military action.

A fall of more than 5% takes West Texas Intermediate (WTI) sharply lower on Monday, as encouraging US-Iran diplomatic headlines temper fears of further supply disruption. The US crude benchmark stands near $96.65 a barrel at the time of writing, having reached $104.03 on Friday, its highest since May.

According to ISNA, Iranian President Masoud Pezeshkian said the Supreme Leader had authorised the government to exercise certain powers over negotiations, prompting the sell-off to accelerate. The week had already begun with oil prices lower following an Axios report that US President Donald Trump favours allowing more time for diplomacy with Iran.

Describing consultations via Qatari and Pakistani mediators as “very intensive,” Iranian Foreign Minister Abbas Araghchi said Tehran had set out its terms and plan. Further progress, he added, rested on Washington’s “political rationality.” Araghchi emphasised that the Strait of Hormuz would reopen only if the US agreed to Iran’s demands, including an end to its naval blockade and the lifting of sanctions.

A final agreement has yet to be announced, however, leaving the prospect of renewed US military action after Tuesday’s midterm elections unresolved. Washington had urged Gulf states to prepare for potential strikes on Iran, the Wall Street Journal reported last week. Speaking at a campaign rally in Iowa on Sunday, Trump also warned that “at some point we’re going to have to give them the hammer.”

Diplomatic efforts have not removed the risks to shipping. According to Iranian state media, Iran’s Islamic Revolutionary Guard Corps said two crude oil tankers had struck sea mines in the Strait of Hormuz and caught fire. Independent verification of the claim is not available.

With disruptions to Gulf exports still casting uncertainty over the supply outlook, seven OPEC+ producers agreed on Sunday to leave December production targets unchanged. A further meeting is scheduled for 29 November, when the group will review its January production plans.