Oil falls over 7% on November 2 amid Iran peace hopes
Brent settles at US$104.77 a barrel as Iran signals scope for peace talks, while analysts highlight risks to Middle East oil supplies
- Oil prices, including Brent and WTI crude, fell by more than 7% on November 2 amid expectations of a diplomatic resolution to the conflict involving Iran.
- The drop was fueled by hopes for more stable crude supplies from the Middle East, prompted by Qatari mediation efforts and signals from Tehran about its willingness to negotiate.
- Both the Iranian president and the US president made public statements suggesting a peace deal was possible, further encouraging the market sell-off.
Prospects of a negotiated end to the US-Israeli war with Iran drove oil prices more than 7% lower on November 2, 2026, as Qatari mediation and signals from Tehran raised expectations of more stable crude supplies from the Middle East.
Brent crude futures settled at US$104.77 a barrel, a decline of US$8.66, or 7.63%. US West Texas Intermediate (WTI) crude was US$7.66, or 7.36%, lower at US$96.46 a barrel.
Both benchmarks had traded lower during the session, with Brent touching US$103.28 a barrel and WTI reaching US$95.15.
Analysts temper diplomatic optimism with caution
Raymond James analyst Pavel Molchanov attributed the price decline to signs of progress towards US-Iran talks. However, Molchanov cautioned that the many “false dawns” of recent months gave investors reason to remain sceptical.
UBS analyst Giovanni Staunovo described a market whose direction continued to depend heavily on developments in the region. “The oil market is still reacting with extreme sensitivity to every headline out of the Middle East,” Staunovo said.
“While fears of an imminent escalation pushed prices up last week, they have dropped sharply at the start of this week as diplomatic talks between the US and Iran continue,” Staunovo added.
Brent had finished October at a six-month high amid concern that fighting in the Middle East could intensify again after the US midterm elections on November 3.
Iran signals negotiating scope as Qatar pursues a deal
Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had granted the government “certain authorities” for peace negotiations. State media quoted Pezeshkian as saying Tehran “will try to resolve the problem with dialogue”, without giving further details.
Iranian negotiators spent several days discussing an end to the war with Qatari mediators. On the evening of November 2, Qatari mediators travelled to Tehran to meet Iranian Foreign Minister Abbas Araqchi over a potential agreement between Iran and the United States.
US President Donald Trump also expressed the possibility of an agreement on November 2, saying Iran wanted a deal to end the war and that one “could happen”.
Shipping attacks and depleted stocks sustain supply risks
The latest diplomatic efforts followed an increase in attacks on oil tankers passing through the Strait of Hormuz. However, shipments from some major exporters have shown signs of recovery.
Saudi Arabia exported more crude in October than in September, according to two of three ship-tracking companies, despite attacks on Saudi energy infrastructure by Yemen’s Iran-aligned Houthis.
The war, which began at the end of February, has depleted oil inventories. Sultan Al Jaber, chief executive of Abu Dhabi National Oil Company (ADNOC), the emirate’s state-owned oil producer, said nearly 1 billion barrels had been drawn from global stocks since the conflict disrupted shipping through the Strait of Hormuz.
Goldman Sachs outlines conditional US$140 Brent scenario
Goldman Sachs pointed to the possibility of further price increases in its November 1 report, citing heightened risks to supply. Brent could reach US$140 a barrel in 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average, according to the bank.
“Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside,” Goldman Sachs said in the report.
