Oil Price Today (November 2): Crude oil falls to $111 as Iran-Qatar talks continue to end war. What are experts saying?

Oil prices declined sharply by over 2% on Monday as Iranian and Qatari officials continued discussions for a third consecutive day, seeking an agreement to end the US-Israeli war on Iran that started in February earlier this year.

Crude oil price on November 2

Brent crude futures fell $2.27 or 2%, to $111 a barrel, while US West Texas Intermediate (WTI) crude dropped $2.42 or 2.32%, to $102 a barrel. Brent had ended October at its highest level in six months, amid concerns that the US-Iran conflict could escalate again following Tuesday's US midterm elections.

However, markets remained cautious about the possibility of stronger rhetoric surrounding Iran, which could push Brent crude towards $120 a barrel after the midterm elections. Iranian Foreign Minister Abbas Araqchi said on Sunday that the ongoing and progressing discussions were aimed at continuing consultations with Qatari mediators. He added that Tehran was prepared for both "defence and diplomacy".


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The discussions are taking place against the backdrop of attacks on oil tankers passing through the Strait of Hormuz, which have pushed up global energy and shipping costs. Saudi Arabia increased its crude exports in October compared with September despite attacks by Iran-aligned Yemeni Houthis on its energy infrastructure, according to two of three ship-tracking companies.

Last week, the Wall Street Journal reported that a senior US military commander had briefed US President Donald Trump on potential military options on Thursday. Trump has repeatedly indicated that he could resume airstrikes on Tehran after next week's midterm elections.

Security risks in the Strait of Hormuz came back into focus last week after an unidentified projectile hit a tanker on Thursday as it completed its outbound passage through the waterway, according to the UK Maritime Trade Operations (UKMTO). The incident highlighted the continuing threat to shipping, despite producers having resumed cargo movements through the strait.

Where are prices headed?

Oil markets could remain volatile over the next couple of weeks amid Israel's recent elections and the US midterm elections scheduled for November 3, according to a Thursday briefing by Saxo Bank, cited in a Reuters report. The Danish bank expects crude prices to stay within a higher range of $70 to $90 a barrel even after the conflict ends, compared with the pre-war range of $60 to $70.

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Uncertainty surrounding the course of the conflict continues to cloud the outlook for oil markets. JPMorgan analysts said the trajectory of the war remained unclear. At the beginning of the conflict, the bank had expected the US administration to avoid crossing certain economic thresholds. However, seven months later, several of these thresholds had been breached, with no clear strategy yet in place to bring the conflict to an end.

The possibility of further supply disruptions has also reinforced expectations of higher crude prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks had demonstrated how shipping disruptions could spread and intensify. Goldman Sachs estimates that crude prices could rise to $120 a barrel if attacks on vessels in the Middle East escalate. However, prices could fall towards $80 a barrel if exports return to normal.

Struyven said risks associated with shipping had become an important factor shaping oil prices, adding that Goldman Sachs sees considerable upside potential for crude. The bank also expects natural gas and refined fuel prices to increase, as supply disruptions generally have a greater impact on gas and refined products than on crude oil.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here