Texas oil prices plunged 7.3 percent on Monday amid growing expectations that the United States and Iran could reach an agreement to end the war that began in February.
At the close of trading in New York, West Texas Intermediate futures contracts for December delivery dropped by $7.66 from the previous session to finish at $96.46 a barrel.
United States President Donald Trump told reporters on Monday that Iran wants to reach an agreement and said that such an outcome could happen.
West Texas Intermediate, commonly referred to as WTI, is a light, sweet crude stream that serves as the primary oil pricing benchmark for the United States. Traded on the New York Mercantile Exchange, WTI contracts reflect domestic supply conditions and global geopolitical developments that influence energy flows.
Diplomatic talks with Iran
The market retreat came as reports emerged of renewed diplomatic contacts aimed at resolving the conflict. According to the news website Axios, President Trump informed Israeli Prime Minister Benjamin Netanyahu that he wanted to give diplomacy with Iran another chance.
Israel and the United States maintain close defense and security ties across the Middle East, with American administrations regularly conferring with Israeli leadership on regional military actions and Iranian strategy.
Iranian Foreign Minister Abbas Araghchi reported on Sunday that indirect talks between the United States and Iran are continuing through the mediation of Qatar. Araghchi explained that the negotiations center on a two-day plan to reopen the Strait of Hormuz, though he noted that a concrete effort has not yet been achieved.
Qatar has frequently acted as a neutral diplomatic intermediary between Washington and Tehran. Because the United States and Iran have lacked formal diplomatic relations for decades, Qatari diplomats regularly facilitate indirect communications and host negotiations between the two nations.
Strait of Hormuz negotiations
The diplomatic push focuses heavily on restoring safe maritime transit through the Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman. The strait is recognized as the world's most critical oil chokepoint, handling approximately one-fifth of global petroleum supplies.
Araghchi stated that Iranian officials are doing everything possible to advance along the diplomatic route. He added that Tehran hopes the other party will act with rationality and prioritize diplomacy over other options, while emphasizing that the Islamic Republic remains prepared for any scenario.
United States Secretary of State Marco Rubio indicated over the weekend that President Trump prefers not to resort to military force. Rubio affirmed that the president would like to resolve the situation with Iran through diplomatic channels.
As the top diplomat in the United States government, the Secretary of State leads the State Department and directs foreign policy initiatives, coordinating international responses to regional conflicts.
Middle East risk and crude prices
Market specialists warned that diplomatic statements alone might not eliminate the geopolitical uncertainty hanging over global energy supplies. Investment firm TD Securities stated on Monday in a research note that reports of diplomatic progress between Washington and Tehran will affect crude prices, which ended October with a monthly surge of 13.76 percent driven largely by Middle East hostilities.
Ryan McKay, head of commodity strategy at TD Securities, cautioned that the market reaction could prove premature without verifiable breakthroughs on the ground. McKay pointed out that as long as a concrete solution to the war is not presented and attacks on oil tankers and by the Houthis in Yemen remain frequent, the firm does not anticipate a complete erosion of the risk premium solely through diplomatic headlines.
The Houthi movement, based in Yemen, has repeatedly launched drone and missile assaults against commercial vessels and oil tankers passing through vital shipping corridors. In commodity markets, a risk premium represents the extra financial cost buyers pay above normal production value to hedge against sudden supply disruptions caused by conflict or political instability.
Monday's sharp decline in Texas crude contrasts with broader volatility across international oil markets. Global benchmark Brent crude recently gained 3.14 percent to reach $116.72 a barrel, its highest price since late April. Texas oil previously fell 1.46 percent to $101.76 a barrel after earlier rising 1.78 percent to $103.82 a barrel following incidents in the Strait of Hormuz.
