Oil prices declined as traders evaluated new diplomatic efforts in the Middle East aimed at preventing a potential resumption of US military strikes on Iran. West Texas Intermediate (WTI) fell below $102 a barrel after a nearly 3% rise in the previous session, while Brent crude closed near $115.
Iran’s Foreign Minister Abbas Araghchi indicated that Tehran remains committed to diplomacy, while the Wall Street Journal reported that US Vice-President JD Vance had reached out to Mohsen Rezaei, secretary of Iran’s top security body. US President Donald Trump told Axios on Oct 28 that negotiations were underway through mediators but expressed uncertainty about their success. “We need to finish the job, either through a deal or another way, we will find out if negotiations can succeed,” he said.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, noted that headlines about diplomatic efforts can influence prices. “Any indication of communication between senior officials on both sides may be enough to prompt some profit-taking, and take a bit of that risk premium out,” she said. Global benchmark Brent has surged 11% in October, reaching its highest level since April amid ongoing conflict.
The price surge has increased pressure on consumers and posed challenges for central bankers aiming to control inflation. While the US Federal Reserve kept interest rates unchanged on Oct 28, traders anticipate a rate hike in December. US midterm elections are scheduled for Nov 3, with signs of declining support for Republicans. President Trump has hinted at potential military action against Iran after the elections, possibly in coordination with Israel.
In Israel, Prime Minister Benjamin Netanyahu leads opposition leader Gadi Eisenkot after a close election, though neither has a clear path to forming a government. President Isaac Herzog will decide who gets the opportunity to assemble a new coalition. Physical market signals are mixed, with Saudi Arabia’s exports near wartime highs despite attacks on energy infrastructure, while US crude inventories fell to their lowest level since July.
Traders are awaiting earnings reports from major oil companies, including Shell, TotalEnergies, ExxonMobil Holdings, and Chevron, scheduled for Oct 29 and Oct 30.