Oil Prices Fall Below $100 as Trump Signals Progress in Iran Negotiations

Oil prices moved lower Monday morning as renewed diplomatic efforts between the United States and Iran raised expectations that shipping disruptions through the Strait of Hormuz could begin to ease. West Texas Intermediate (WTI) futures fell more than $4/bbl, trading near $99.83/bbl and dropping below $100/bbl. Brent crude declined approximately $4.77/bbl to $108.66/bbl. Gasoline futures fell approximately 15 cents per gallon, while diesel futures dropped 19 cents per gallon in early trading. Trump's decision to continue negotiations with Iran has eased concerns about an immediate return to military action, bringing crude and refined product prices lower. However, tankers continue to face threats from naval mines and attacks near the Strait of Hormuz, and Iran has made lifting the U.S. naval blockade a condition for restoring safe passage through the waterway.

President Donald Trump said negotiations with Iran are "going fine" and confirmed that he spoke with Israeli Prime Minister Benjamin Netanyahu over the weekend about allowing diplomatic discussions to continue. Trump also stated that the conflict could end "very soon, one way or the other," while maintaining the possibility of additional military action if negotiations fail. Iran has made lifting the U.S. naval blockade a condition for restarting direct talks with Washington and restoring safe passage through the Strait of Hormuz. Iranian officials have also met with Qatari mediators to discuss a proposal aimed at ending the conflict, with another round of talks possible. While neither side has reached an agreement, Trump's willingness to continue negotiations rather than resume military action has contributed to Monday's decline in crude prices.

Despite the diplomatic progress, conditions around the Strait of Hormuz remain unsettled. Iran's Islamic Revolutionary Guard Corps (IRGC) stated that two tankers traveling through an unauthorized route struck naval mines, reinforcing the dangers facing vessels attempting to transit the waterway. Iranian Supreme Leader Mojtaba Khamenei also warned that renewed military action by the United States or Israel could trigger attacks without geographic limitations. Meanwhile, officials from Saudi Arabia, Turkey, and Pakistan are preparing additional discussions with Iran to prevent the conflict from escalating. The progress toward reopening the Strait could reduce transportation costs and improve access to Middle Eastern crude, but lasting improvement will depend on the restoration of safe, consistent shipping.

Over the weekend, OPEC+ reaffirmed its decision to maintain existing crude production quotas in December, pausing further increases after six consecutive months of modest adjustments through August. The decision comes as Middle Eastern producers continue restoring exports disrupted by the conflict. The United Arab Emirates reported that crude exports exceeded prewar levels at times, while Saudi Arabia increased shipments in October compared with September despite attacks on its energy infrastructure. These improvements are helping replace some of the barrels lost earlier in the conflict, although the recovery remains uneven. According to Reuters, global oil inventories have declined by nearly 1 billion barrels since the war disrupted shipping through the Strait of Hormuz in February.

Even with a recovery in exports, concerns about future supply disruptions have prompted Goldman Sachs to raise its crude oil price forecasts. The bank increased its December 2026 WTI forecast to $94/bbl and Brent forecast to $105/bbl, up from $81/bbl and $90/bbl, respectively. For 2027, Goldman Sachs raised its average WTI forecast to $78/bbl from $73/bbl and Brent to $88/bbl from $80/bbl. The revised outlook accounts for the possibility of renewed shipping attacks, infrastructure damage, and prolonged production interruptions. In a more severe scenario, Goldman Sachs projects Brent could reach $140/bbl in 2027 if Persian Gulf production remains 3.5 Mbpd below its 2025 average.

Outside the Middle East, Ukraine has resumed attacks on Russian refining facilities, targeting operations in the Ufa and Volga regions. The strikes come as Russia's domestic fuel shortages were beginning to ease following increased imports and a partial recovery in refinery operations. Additional damage could disrupt that recovery and reduce the availability of refined products. This is particularly relevant for diesel buyers, as disruptions to refining operations can keep product prices elevated even when crude prices decline.

U.S. drilling activity also increased during the final week of October. The domestic crude oil rig count rose by two to 462 rigs for the week ended October 30, bringing the total to six rigs above the previous month and 48 rigs higher year-over-year. Canada's crude rig count increased by two to 154 rigs, up five month-over-month and 27 year-over-year. While additional drilling activity reflects continued investment in North American production, new supply will take time to reach the market and cannot immediately replace barrels affected by disruptions in the Middle East.

For fuel buyers, Monday's decline in crude, gasoline, and diesel futures offers some near-term relief following weeks of elevated energy prices. However, the outcome of U.S.-Iran negotiations remains the primary factor determining whether those declines continue. A credible agreement that restores safe passage through the Strait of Hormuz would be bearish for crude and refined products, particularly as Middle Eastern exports recover. Until shipping conditions improve and global inventories begin rebuilding, renewed attacks or unsuccessful negotiations could quickly reverse the current decline.