Oil plunges more than 6% as diplomacy with Iran gathers pace, Trump weighs deal

Brent crude falls from near March highs as Qatari and regional mediators head to Tehran; investors brace for central bank decisions

By LineZotpaper AI staff

Published26 October 2026

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Illustration: Oil plunges more than 6% as diplomacy with Iran gathers pace, Trump weighs deal

Oil prices tumbled more than 6% on Monday, retreating from near wartime highs, as diplomatic efforts to calm the Iran conflict accelerated and US President Donald Trump said he was weighing a deal with Tehran. Brent crude fell from about $117.4 per barrel on Friday to around $110, while US benchmark West Texas Intermediate dropped about 2% to $101.5.

The sell-off reversed some of last week's surge, which had pushed Brent to its highest close since March and within 2% of the $119.5 peak hit at the start of the Iran war. Prices had risen after Yemen’s Iran-aligned Houthi rebels attacked airports and energy facilities in Saudi Arabia, the world’s largest oil exporter.

But the mood shifted over the weekend. Qatari mediators reportedly travelled to Tehran on Sunday in coordination with Washington, while Saudi Arabia's defence minister, Pakistan's army chief and Turkey's intelligence chief were due in the Iranian capital on Monday for regional security talks.

In an interview with Fox News on Sunday, Trump framed the decision as a choice, asking, "do I make a deal with them, or do I finish them off?"

Supply risks have not disappeared: the Houthis said they struck Saudi airports and energy sites again over the weekend, and Riyadh reported shooting down further missiles and drones.

At a campaign event in Port Huron, Michigan, Trump defended his administration's reasons for starting the conflict and, citing the Wall Street Journal, claimed that "oil coming out of the Strait of Hormuz is now topping what it was before the war." The strait carried about a fifth of the world’s oil before the conflict. Gulf crude exports excluding Iran returned to pre-war levels in September, according to ship-tracking firm Kpler, but around 40% of them now bypass the strait through pipelines, compared with 17% before the war.

Investors are also bracing for a busy week of central bank decisions: the US Federal Reserve announces on Wednesday, widely expected to hold rates at 3.75% to 4%, followed by the European Central Bank on Thursday and the Bank of Japan on Friday. Earnings season peaks with roughly one in three S&P 500 firms reporting, including Alphabet, Microsoft and Amazon, while BP and Shell update investors in Europe.

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Brent crude oil price (US$ per barrel)

US$ per barrel

Values approximate as reported. Source: Euronews

Analysis

Why This Matters

The oil price swing directly affects global energy costs and inflation expectations, hitting consumers and businesses already grappling with high living costs.
The diplomatic push could de-escalate a conflict that has disrupted one of the world's most critical oil chokepoints, the Strait of Hormuz, with implications for energy security and regional stability.
Central bank decisions this week will be shaped by oil price volatility and its impact on inflation, influencing interest rates and borrowing costs worldwide.

Background

The Iran war began in March 2024 when US forces launched strikes against Iranian targets, escalating tensions that had been building over Iran's nuclear programme and regional proxies. Before the conflict, Brent crude traded at around $72 per barrel. The war has led to Houthi attacks on Saudi infrastructure and disruptions to shipping in the Strait of Hormuz, which carried about a fifth of global oil. Gulf states have diversified export routes, with pipelines now bypassing the strait for around 40% of their crude exports.

What to Watch

Whether Trump decides to pursue a diplomatic deal or escalate military action, particularly after his reference to "finish them off."
The outcome of regional security talks in Tehran on Monday, including the roles of Saudi Arabia, Pakistan and Turkey.
Continued Houthi attacks on Saudi targets: any major disruption to Saudi oil facilities could reverse the price decline.
Central bank policy decisions this week, especially the Fed's rate stance and the ECB's handling of French bond market turmoil.

Sources

Oil plunges more than 6% from near wartime highs as diplomacy over Iran seemingly gathers pace · Euronews

Checked

12 claims in this story checked against 1 source: 12 supported.

Show each claim

SupportedOil prices fell more than 6% on Monday.Euronews: “Brent crude fell more than 6% on Monday morning”
SupportedDiplomatic efforts to calm the Iran war gathered pace.Euronews: “diplomatic efforts to calm the Iran war gathered pace”
SupportedTrump said he was weighing a deal with Tehran.Euronews: “US President Donald Trump said he was weighing a deal with Tehran.”
SupportedBrent fell from about $117.4 a barrel on Friday to around $110.Euronews: “Brent, the global oil benchmark, fell more than 6% from about $117.4 per barrel at Friday’s close to around $110 at the time of writing”
SupportedWest Texas Intermediate dropped about 2% to $101.5 a barrel.Euronews: “US benchmark West Texas Intermediate dropped about 2% to $101.5 per barrel.”
SupportedQatari mediators reportedly travelled to Tehran on Sunday in coordination with Washington.Euronews: “Qatari mediators reportedly travelled to Tehran on Sunday in coordination with Washington”
SupportedSaudi Arabia’s defence minister, Pakistan’s army chief and Turkey’s intelligence chief were due in Tehran on Monday for regional security talks.Euronews: “Saudi Arabia's defence minister, Pakistan's army chief and Turkey's intelligence chief were due in the Iranian capital on Monday for regional security talks.”
SupportedIn a Sunday Fox News interview, Trump asked, “do I make a deal with them, or do I finish them off?”Euronews: “In an interview with Fox News on Sunday, Trump framed it as a choice asking, "do I make a deal with them, or do I finish them off?"”
SupportedAt a Port Huron campaign event, Trump, citing the Wall Street Journal, claimed that oil coming through the Strait of Hormuz was topping its pre-war level.Euronews: “Citing the Wall Street Journal, he also claimed that "oil coming out of the Strait of Hormuz is now topping what it was before the war [...] our navy has been incredible."”
SupportedThe Strait of Hormuz carried about a fifth of the world’s oil before the war.Euronews: “The Strait of Hormuz carried about a fifth of the world’s oil before the war.”
SupportedGulf crude exports excluding Iran returned to pre-war levels in September, while about 40% now bypass the Strait of Hormuz via pipelines, compared with 17% before the war.Euronews: “Gulf crude exports, excluding Iran, returned to pre-war levels in September, according to ship-tracking firm Kpler, but around 40% of them now bypass the strait through pipelines, compared with 17% before the conflict.”
SupportedThe Fed decision was due Wednesday and was widely expected to leave rates at 3.75% to 4%, followed by the ECB on Thursday and the Bank of Japan on Friday.Euronews: “the US Federal Reserve announces its decision on Wednesday, and is widely expected to keep rates at 3.75% to 4% before a possible hike in December. The European Central Bank follows on Thursday [...] and the Bank of Japan on Friday.”