Oil prices experienced a significant decline on Monday, with Brent crude falling more than 6.5% to $105.55 a barrel, its lowest level since October 16. This represented the sharpest drop in three months, triggered by hopes that the U.S. and Iran would reach a breakthrough to end their war without further escalation. The price drop pushed government borrowing costs down and sent airline company shares higher.
The decline occurred as the Trump administration discussed a peaceful resolution to the conflict ahead of the midterms. Both the U.S. and Iranian presidents signalled they are open to a diplomatic solution, while efforts to revive peace negotiations between Washington and Tehran continued amid ongoing Mideast tensions.
However, oil prices later recovered some of the previous session's steep losses as investors weighed fresh U.S. strikes on Iran against continuing diplomatic efforts. Meanwhile, the Iranian Foreign Minister stated that discussions with Qatari mediators regarding a proposal to reopen the Strait of Hormuz are continuing, although they have not yet produced an agreement.