Oil Slides More Than 6% as Hopes for Iran Diplomacy Grow

Brent crude futures dropped more than 6% to around $110 a barrel, retreating from Fridays close of $117.40, its highest since March 19. US West Texas Intermediate (WTI) crude fell about 2% to $101.50.

Prices had surged last week after attacks on Saudi infrastructure heightened fears of further disruption to regional oil supplies. Brent has climbed significantly since the conflict began in early March, when it was trading near $72 a barrel.

Diplomacy Offers Some Relief

Market sentiment improved over the weekend as regional mediators stepped up efforts to ease tensions between Washington and Tehran. Qatari mediators reportedly travelled to Tehran after coordinating with Washington, while senior officials from Saudi Arabia, Pakistan and Turkey were expected to hold security talks in the Iranian capital on Monday.

US President Donald Trump said he was weighing the possibility of a deal with Iran, fuelling hopes that the conflict could be contained.

However, the risk of further escalation remains. Yemens Houthi movement, aligned with Iran, reportedly launched further attacks on Saudi infrastructure over the weekend, while Riyadh said it had intercepted additional missiles and drones.

The Strait of Hormuz remains a key concern for energy markets. Before the conflict, the strategic waterway carried roughly one-fifth of global oil supplies. Although Gulf crude exports excluding Iran had returned to pre-war levels in September, a growing share was being transported through pipelines that bypass the strait, according to ship-tracking data from Kpler.

Markets Rise Ahead of Central Bank Decisions

European shares rose on Monday, with the STOXX Europe 600 and Euro Stoxx 50 both gaining more than 0.6%. The FTSE 100, Germany‘s DAX and France’s CAC 40 advanced between 0.3% and 1%. US stock futures also edged higher, with both the S&P 500 and Nasdaq 100 futures up 0.3%.

Investors are bracing for a series of central bank decisions this week. The Federal Reserve is widely expected to hold interest rates at 3.75% to 4% on Wednesday, with markets focused on signals about the policy outlook for December. The European Central Bank is due to announce its decision on Thursday, followed by the Bank of Japan on Friday.

Meanwhile, earnings season is reaching its peak, with roughly one-third of S&P 500 companies scheduled to report results, offering fresh insight into corporate resilience amid geopolitical and economic uncertainty.

For oil markets, prices will remain sensitive to developments in US-Iran diplomacy. While hopes of a deal have eased immediate supply concerns, the risk of renewed disruption means the geopolitical premium could quickly return.