Oil Falls More Than 6% as Draft Iran Peace Proposal Circulates

Oil prices dropped sharply Monday on hopes that talks could end the U.S.-Israeli war with Iran, a day before Election Day, according to Reuters reports carried by Yahoo Finance and OilPrice.com and a UPI report on Yahoo.

By Monday morning, Brent crude, the international benchmark, was down 6.4 percent at $106.20 a barrel, and West Texas Intermediate, the U.S. benchmark, was down 6.5 percent at $97.35, UPI reported. Earlier in Asian trading, Brent was near $108.61 and WTI near $99.62, down about 4 percent, according to OilPrice.com. Brent had risen above $110 last week, its highest since the war began at the end of February.

The move followed weekend talks in Qatar. Iranian negotiators left Doha on Sunday with a draft proposal that is now circulating, with a follow-up meeting possible, a source briefed on the talks told Reuters. The draft’s contents have not been made public. Iran’s foreign minister, Abbas Araghchi, said a deal is possible if Washington shows goodwill, according to Iran’s state news agency as quoted by UPI. Iran is seeking relief from U.S. sanctions, a smaller American military presence in the region and an end to the U.S. blockade of the Strait of Hormuz.

Iran’s foreign ministry spokesman, Esmaeil Baghaei, said no final agreement can start, and the strait cannot be reopened or secured, unless the blockade ends. Secretary of State Marco Rubio said at the weekend that the administration would prefer to resolve the matter peacefully but is confident it has what it needs to act militarily if necessary.

Analysts urged caution. Tim Waterer, chief market analyst at KCM Trade, told Reuters that hopes for diplomacy and the lack of military escalation over the weekend had taken some heat out of prices “for now.” Strategists at ING noted that major turns in the conflict have often come on weekends, and that traders may stay on edge until the end of the week because new U.S.-Israeli strikes could follow the midterms.

Energy costs are a central issue for voters and for the industry. Supporters of the administration’s approach argue that firm military pressure created the opening for talks, while critics say the war itself drove prices up. Neither claim is settled by one day’s trading.

No agreement has been reached, and the price drop reflects expectations rather than any change in oil shipments through the strait.