Markets
Oil's 7.6% Drop Met a Strike Report Within Hours
Brent settled 7.6% lower at $104.77 on Monday, and WTI had its worst day since July 27, as Trump gave Iran diplomacy more time. A report of US strikes on Qeshm Island then lifted it in Asia.
The war premium in oil was cut hard on Monday and partly rebuilt before Tuesday's European open. Brent settled $8.66, or 7.6%, lower at $104.77 a barrel on November 2, after touching about $103.29, and West Texas Intermediate fell 7.4% to $96.46, its biggest daily loss since July 27, according to CNBC. What had been a 3% drop in Asian trading on reports of a two-day plan to reopen the Strait of Hormuz became a rout once Washington joined the conversation.
President Trump said Iran wants to "make a deal and that could happen", and Axios reported that he told Israel's prime minister he wanted to give diplomacy more time before considering further strikes; he has also said he will not attack Iran before Tuesday's midterm elections. Secretary of State Marco Rubio said Trump "hasn't made a decision" on striking again, adding: "But we would prefer to do it peacefully." From Tehran, President Masoud Pezeshkian said the supreme leader had given the government authority to resolve problems through dialogue, and Foreign Minister Abbas Araghchi said a deal was possible if Washington "demonstrates goodwill".
Then came a different kind of headline. Late on Monday, US time, the Wall Street Journal reported that US forces had struck Iran's Qeshm Island, at the mouth of the strait, in the latest of a series of limited strikes Washington has carried out quietly over recent weeks; a US official described them as defensive, meant to stop Iran threatening ships. Brent rose 0.58% to $105.38 and WTI 0.73% to $97.17 in early Asian trade. "The report bumped the oil price with some risk premium again," Tim Waterer of KCM Trade told Reuters.
Both moves were about probabilities rather than barrels. The strait remains disrupted, as it has been for eight months, and oil gained more than 10% in October on the risk of escalation. Ryan McKay of TD Securities said most of those gains were risk premium, and that "so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent" diplomatic headlines alone would not erase it. Phillip Nova's Priyanka Sachdeva made the mirror point: new strike headlines may struggle to sustain a rally without evidence of further physical disruption.
The rest of the market traded Monday's version of the story. The energy ETF XLE fell 3.96% to $67.25, and gold futures rose 1.8% to $3,969.60 as the dollar and Treasury yields eased. The range that now matters for crude is Monday's: WTI between $95.15 and $102.75. A move back above the top would mean the market believes the strikes more than the talks; a break below the bottom would need something from Washington more concrete than a willingness to wait.