Oil kept falling on Tuesday after President Donald Trump said the US military campaign against Iran had largely run its course and that talks were moving closer to a deal. Brent crude was down about 2% in early trading, its lowest level since late August. West Texas Intermediate (WTI) lost a similar amount.
That came on top of a heavy Monday. Brent futures settled 5.85% lower and WTI gave up 4.38%, according to Reuters, and both slid further after the close once Trump spoke at the White House. Brent dropped below $100 last week and has now shed roughly a fifth of its value since the end of October. Last week's 16% slide was Brent's biggest one-week loss since early 2020, when COVID-19 lockdowns crushed fuel demand.
What Trump said
Trump hosted Qatar's Prime Minister, Sheikh Mohammed bin Abdulrahman Al Thani, on Monday. Vice President JD Vance sat in on the talks. Doha has acted as a key channel between Washington and Tehran. It was the first time Trump had hosted another country's leader since Republicans lost ground in the midterm elections.
Speaking to reporters after the meeting, Trump said Iran was "effectively over" in military terms. He added that a return to strikes "doesn't seem to be a very necessary thing," while stressing that US forces remained "locked and loaded" if the picture shifted. On Truth Social he wrote that he saw "positive momentum" in the talks.
Sheikh Mohammed said the two men discussed "ways to progress the US-Iran talks."
The US naval blockade of Iranian ports is not going anywhere for now. Trump said Saudi Arabia, Qatar, the UAE, Bahrain and Kuwait would rather keep the current setup in place.
The offer on the table
Israel Hayom, citing two diplomatic sources, reported that Tehran has agreed to interim terms negotiated through Qatar. Iran would let tankers move freely through Hormuz again and halt its attacks on shipping. Washington, for its part, would end the blockade and unfreeze roughly $8 billion of Iranian money held in Doha. The package leaves Iran's nuclear program aside. Washington and Tehran have yet to confirm any of it.
Iran now says it could restore shipping within two days once its conditions are met. Earlier offers spoke of seven days. Foreign ministry spokesman Esmaeil Baghaei called the shorter timeline a "sign of goodwill."
Not everyone is convinced. Secretary of State Marco Rubio has played down hopes of a quick breakthrough, describing several of Iran's demands as unacceptable. Treasury Secretary Scott Bessent is also against releasing the funds, reports say. In Tehran, Supreme National Security Council secretary Mohsen Rezaei told Washington on X to "stop manufacturing fake news about imaginary talks."
Why traders are selling
Ships are still being hit. Iran's Revolutionary Guards said they struck three tankers over the weekend for using routes Tehran had not approved, and Iran's army said a mine set another tanker ablaze. On Monday, Saudi Arabia reported a limited fire on its East-West pipeline after an attack, with no impact on operations.
The market has mostly shrugged that off.
"Crude futures are under selling pressure once again as oil volumes continue strong through the Strait of Hormuz," said BOK Financial's Dennis Kissler, senior vice president of trading.
Gulf supply is also coming back. Output from OPEC climbed to 22.87 million barrels a day in October, a gain of 1.38 million on September, according to a Reuters survey. Saudi Arabia, Iraq and Kuwait added the most. Output is still about 10% below February's average. Morgan Stanley noted that Dated Brent, the price of physical North Sea cargoes, has slipped below nearby futures, a sign that prompt barrels are easier to find.
What to watch
- Whether Trump signs off on the Qatari plan, and whether Iran's two-day offer holds
- New attacks on tankers near Hormuz, which could quickly add back a risk premium
- Monthly outlooks from three agencies: the EIA (Tuesday), OPEC (Wednesday) and the IEA (Friday)
- EIA weekly inventory data, pushed to Thursday by the Veterans Day holiday