Oil prices fall on signs of a diplomatic settlement, Brent drops to $109.80 a barrel

Crude oil prices have fallen in international markets on the prospect that a diplomatic path may ease the military tensions among Iran, the United States and Israel in the Middle East. From the start of trading in Asian markets on Monday, both of crude oil's main international benchmarks, Brent crude and West Texas Intermediate (WTI), showed a clear decline. The information comes from reports by the international news agency Reuters and the energy portal Oilprice.com.

By Monday afternoon, Brent crude had fallen to $109.80 a barrel in international markets. At the same time, WTI crude, the benchmark for the US domestic market, had dropped to $100.50 a barrel.

Earlier, in October, oil prices in world markets had climbed to their highest level in six months as the regional conflict intensified. On 30 October, Brent crude touched $118 a barrel. Over that month as a whole, Brent crude rose 13.6 percent and WTI crude rose 15.2 percent.

Fears of a new military operation in the Middle East around the upcoming US midterm elections had heated up the oil market over concerns that supplies would be disrupted. But positive signals from the Qatar-mediated diplomatic talks with Tehran have brought immediate relief to the market.

Tim Waterer, chief analyst at the market analysis firm KCM Trade, told Reuters that after the previous week's abnormal surge, the current fall can be seen as a logical market correction. However, he also warned that if Washington takes an aggressive position again on the conflict, oil prices could once more touch $120 a barrel.

Market experts say falling domestic demand in China is working as a major factor behind oil prices not spiralling further. Alongside the slowdown in China's economic growth, the huge rise in the use of environmentally friendly electric vehicles (EVs) in the country has shrunk global demand for fuel oil.

On the progress of a settlement, Iran's foreign minister Abbas Araghchi said constructive talks with Qatar are moving forward. He also said Tehran is maintaining full readiness for both situations, diplomacy or national defence.

Meanwhile, against the backdrop of the existing geopolitical uncertainty, OPEC Plus, the international alliance of oil-exporting countries, has taken an in-principle decision to keep its existing oil production target for December unchanged. The cautious position was adopted at a meeting of seven main partner countries of the alliance, including Saudi Arabia and Russia.

At OPEC Plus's next meeting on 29 November, a fresh review of oil production and quota allocation for 2027 is due to take place.