Oil prices fell sharply on Monday, pushing the U.S. benchmark West Texas Intermediate below $100 a barrel, amid reports that the United States and Iran were seeking diplomatic options and preparing for possible military strikes.
Futures for international benchmark Brent crude for January delivery fell 4.61% to $108.20 a barrel, while U.S. West Texas Intermediate futures for December declined 4.44% to $99.50 per barrel.
Secretary of State Marco Rubio said that President Donald Trump prefers to resolve the conflict diplomatically. Trump “hasn't made a decision,” Rubio said, adding that the president expresses “incredible confidence that if we needed to do something militarily, we would have the ability to do it.” The administration would “prefer to do it peacefully,” Rubio told reporters.
Iranian Supreme Leader Mojtaba Khamenei on Saturday called for the country's armed forces to meet “any level or type of threat” with “an immediate, impactful, and geographically unrestricted response.” Iranian authorities signaled that a deal remains possible following two days of Qatari-mediated talks, according to Al Jazeera, provided their demands are implemented tangibly.
The diplomatic signals come amid reports from The Wall Street Journal and The New York Times that the U.S. is preparing for possible renewed military actions after the Nov. 3 midterm elections.
Tamas Varga of PVM Oil Associates said concerns over the conflicts will likely linger in the near term. “Attacks on ships and refineries in the Middle East and on civilians in Ukraine continue, doing little to inspire confidence in the prospects for lasting ceasefires in the foreseeable future.” “Nonetheless, hope springs eternal,” Varga added.
Analysis
Why This Matters
- The sharp drop in oil prices provides immediate market confirmation that investors are pricing in the possibility of de-escalation in the US-Iran conflict.
- The contrast between Rubio's diplomatic overtures and Khamenei's call for an unrestricted response highlights the fragility of any potential deal.
- The post-midterm election period is identified as a potential trigger for renewed military action, directly tying electoral politics to energy market volatility.
Background
The conflict between the United States and Iran has escalated throughout 2026, disrupting global shipping lanes and energy infrastructure in the Middle East. Oil prices had remained elevated near the $100 mark due to the risk of supply disruptions. Qatar has acted as a key mediator between the two nations.
Key Perspectives
Secretary of State Marco Rubio: Trump has not made a decision on military action, and the US prefers a diplomatic resolution, though it has the capability to act militarily if needed.
Supreme Leader Mojtaba Khamenei: Iran's armed forces must respond to any threat immediately, impactfully, and without geographic restriction.
Iranian authorities (via Al Jazeera): A deal remains possible following Qatari-mediated talks, provided demands are implemented tangibly.
Tamas Varga, analyst at PVM Oil Associates: The ongoing attacks in the Middle East and Ukraine mean hopes for lasting ceasefires are tempered by continued violence.
What to Watch
- Whether the post-Nov. 3 midterm period triggers the U.S. military actions that reports indicate are being prepared.
- The trajectory of crude oil prices over the next week as a direct market thermometer for geopolitical risk.
- Whether the tangible implementation of demands, as stated by Iranian authorities, gains traction in the diplomatic channel.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedU.S. crude fell below $100 a barrel as the U.S. and Iran signalled diplomacy.US Top News and Analysis: “Oil prices fell sharply early on Monday amid reports that both the U.S. and Iran are seeking diplomatic options to bring an end to the Middle East conflict.”
- SupportedOil prices fell sharply on Monday amid reports of diplomatic efforts and possible military preparations.US Top News and Analysis: “Oil prices fell sharply early on Monday amid reports that both the U.S. and Iran are seeking diplomatic options to bring an end to the Middle East conflict.”
- SupportedRubio said Trump prefers a peaceful resolution.US Top News and Analysis: “U.S. Secretary of State Marco Rubio said that President Donald Trump prefers not to use military force and would like to resolve the Iranian war "diplomatically."”
- SupportedKhamenei urged Iran's armed forces to be ready to respond to threats.US Top News and Analysis: “Iranian Supreme Leader Mojtaba Khamenei on Saturday called for Tehran's armed forces to meet "any level or type of threat" with "an immediate, impactful, and geographically unrestricted response."”
- SupportedIranian authorities signalled that a deal remains possible after two days of Qatari-mediated talks if demands are implemented tangibly.US Top News and Analysis: “Iranian authorities also signaled that a deal is still possible, following two days of talks mediated by Qatar, as long as demands are implemented tangibly, according to Al Jazeera.”
- SupportedBrent futures for January delivery fell 4.61% to $108.20 a barrel.US Top News and Analysis: “Futures for international benchmark Brent crude for January delivery fell 4.61% to $108.20 a barrel as of 5:49 a.m. ET.”
- SupportedU.S. WTI futures for December delivery fell 4.44% to $99.50 a barrel.US Top News and Analysis: “U.S. West Texas Intermediate futures for December declined 4.44% to $99.50 per barrel.”
- SupportedRubio said Trump “hasn't made a decision” and expressed confidence in the ability to act militarily if needed.US Top News and Analysis: “Trump "hasn't made a decision...what the president expresses to you is incredible confidence that if we needed to do something militarily, we would have the ability to do it”
- SupportedRubio said the administration would “prefer to do it peacefully.”US Top News and Analysis: “But we would prefer to do it peacefully”
- SupportedKhamenei called for an “immediate, impactful, and geographically unrestricted response” to any level or type of threat.US Top News and Analysis: “Iranian Supreme Leader Mojtaba Khamenei on Saturday called for Tehran's armed forces to meet "any level or type of threat" with "an immediate, impactful, and geographically unrestricted response."”
- SupportedThe Wall Street Journal and The New York Times reported that the U.S. was preparing possible renewed military actions after the Nov. 3 midterm elections.US Top News and Analysis: “Reports from The Wall Street Journal and The New York Times indicate that the U.S. is preparing for possible renewed military actions after the Nov. 3 midterm elections.”
- SupportedVarga said continuing attacks on ships, refineries and civilians do little to inspire confidence in prospects for lasting ceasefires, and added, “Nonetheless, hope springs eternal.”US Top News and Analysis: “"Attacks on ships and refineries in the Middle East and on civilians in Ukraine continue, doing little to inspire confidence in the prospects for lasting ceasefires in the foreseeable future," said Tamas Varga, analyst at PVM Oil Associates. "Nonetheless, hope springs eternal," Varga added.”
