Oil prices fell more than 3% on Monday as hopes for diplomacy in the U.S.-Israeli war with Iran eased fears of supply disruptions, pulling benchmarks back from the strong gains recorded in October.

January Brent futures dropped about 3.1% to $109.90 a barrel in early trading, while U.S. West Texas Intermediate (WTI) crude fell 3.5% to $100.47. WTI traded below $100 a barrel during the session, a round-number threshold that drew attention in market commentary. Both benchmarks had rallied nearly 15% in October, with Brent climbing to its highest level in six months.

Diplomacy takes center stage

President Donald Trump told Israeli Prime Minister Benjamin Netanyahu on Saturday that he preferred to give diplomacy more time, Axios reported. Netanyahu had pressed for U.S. strikes to restart soon after Tuesday's midterm elections.

The reaction was captured in a post by financial commentary outlet The Kobeissi Letter on X:

BREAKING: US oil prices drop below $100/barrel after US Secretary of State Marco Rubio says that President Trump prefers not to use military force and would like to resolve the Iran War “diplomatically.” pic.twitter.com/DsjSh8Xwtw

— The Kobeissi Letter (@KobeissiLetter) November 2, 2026

Iranian and Qatari officials held a third consecutive day of talks, with Qatar working to mediate a proposal to reopen the Strait of Hormuz, the chokepoint through which roughly one-fifth of the world's oil passes. Iranian Foreign Minister Abbas Araghchi said on Sunday that the discussions had not produced an agreement. An Iranian delegation led by a deputy foreign minister traveled to Qatar, and no direct meeting with U.S. officials was planned.

Tehran has said it remains open to diplomacy while preparing to defend itself. Attacks on tankers and restrictions on Iranian oil exports have pushed up shipping and insurance costs, and the risk of renewed fighting remains despite the diplomatic push.

The Wall Street Journal reported that the United States told several Gulf Arab countries to prepare for a possible short, intense military campaign after Tuesday's midterm elections. Trump has not made a final decision, leaving two scenarios in play for oil markets — a negotiated reopening of the strait or a renewed military campaign after the vote.

Supply and forecasts

Seven OPEC+ producers agreed on Sunday to keep December output targets unchanged. The alliance, which pairs the Organization of the Petroleum Exporting Countries with allied producers led by Russia, will meet again on Nov. 29 to review January levels. The decision leaves the group's supply policy unchanged heading into the final month of the year, making the Nov. 29 session the next scheduled checkpoint for traders assessing January supply.

Exporters are moving more oil around the Strait of Hormuz. According to Kpler, loadings at Fujairah and Omani terminals are 36% above prewar levels, while Red Sea shipments are 8% higher. Even with the increase, OPEC's oil output remained more than 3 million barrels a day below prewar levels in September.

Goldman Sachs raised its December 2026 Brent forecast to $105 a barrel from $90, and lifted its WTI forecast to $94 from $81. The bank also raised its 2027 average projections to $88 for Brent and $78 for WTI, while expecting supply risks to stay elevated. Goldman's scenario allows for 1 million barrels per day of potential disruptions in 2027, citing the conflicts in the Middle East and between Russia and Ukraine, as well as possible problems in Kazakhstan and parts of Africa.

Security risks persisted over the weekend. A Saudi-led coalition said it targeted resources used by Yemen's Houthi militants for missile and drone programs, and Saudi air defenses destroyed a Houthi ballistic missile.

In the latest trading on Monday, Brent was down about 3.96% at $108.94 a barrel, while WTI was down about 4.08%, extending the day's declines.