AI-assisted research analysis by FutureKnowledge. Sources checked 3 November 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Brent crude oil plunged 7.63% on Monday to settle at $104.77 a barrel as hopes grew for a US-Iran settlement. By Tuesday prices were climbing again after a reported US strike on Iran’s Qeshm Island, which sits at the mouth of the Strait of Hormuz.
Oil price crash: what happened on Monday
According to a Reuters report carried by Yahoo Finance, Brent settled $8.66 lower at $104.77. US West Texas Intermediate (WTI) settled $7.66 lower at $96.46, back below $100, according to Newsquawk and The National. Figures quoted after the settlement were slightly lower. Gulf News put Brent at $104.10, down 8.22%, at 21:38 GMT. This article uses the settlement prices.
The fall deepened through the day. In Asian hours Brent was down about 3%, as FutureKnowledge reported in its earlier analysis of Iran’s two-day Hormuz reopening plan. By mid-session in New York, OilPrice.com reported Brent down $7.85 at $105.60. It followed a strong October: Gulf News said Brent rose 13.6% and WTI 15.2% during the month, and Brent ended October at a six-month high.
Why oil prices fell: diplomacy and a shrinking risk premium
No new oil reached the market on Monday. What changed was the outlook for diplomacy. Iranian President Masoud Pezeshkian said Supreme Leader Mojtaba Khamenei had given the government “certain authorities” for peace talks, and that Tehran would try to resolve the problem through dialogue, according to the Reuters report republished by Baird Maritime. Foreign Minister Abbas Araghchi said negotiators working with Qatar were discussing a proposal that could reopen the Strait of Hormuz in as little as two days if Washington meets Tehran’s conditions, OilPrice.com reported. Those conditions include an end to the US naval blockade of Iranian ports and the lifting of oil sanctions.
Washington’s tone also softened. Newsquawk reported that President Donald Trump said “no” when asked whether he was considering strikes on Iran after the midterm elections. He said Iran wants a settlement and that a deal could happen.
Analysts say this was a risk premium unwinding. Goldman Sachs estimates that a geopolitical premium of about $27 a barrel accounts for most of the recent rally, according to OilPrice.com. UBS analyst Giovanni Staunovo said the market is still reacting “with extreme sensitivity” to every Middle East headline, Reuters reported.
Why oil rose again on Tuesday: the Qeshm Island strike
Overnight, the Wall Street Journal reported, citing US officials, that US forces struck Qeshm Island. Officials described the strikes as defensive, aimed at stopping Iran from attacking commercial ships in the strait. Iranian state media reported several explosions on the island, The National said, describing the strike as the latest in a series of limited US strikes in recent weeks.
The market’s first reaction was modest. Reuters reported Brent up 48 cents, or 0.5%, at $105.25 at 0104 GMT, and WTI up 0.5% at $96.93. KCM Trade’s Tim Waterer said the report “added a degree of risk premium back”. The gains then grew. By 12:52 pm UAE time, The National reported Brent up 2.03% at nearly $107 and WTI up 1.75% at $98.15. Emirates NBD’s Daniel Richards told The National that the strikes “renewed uncertainty” and left the diplomatic opening vulnerable.
Newsquawk noted that traders tend to separate strikes on military targets from attacks on tankers or energy infrastructure, and that only the second has historically sustained a premium.
The supply picture has not changed yet
The physical shortage is still in place. OPEC output in September was more than 3 million barrels a day below pre-war levels, Gulf News reported, and OPEC+ kept December targets unchanged, as covered in our analysis of the OPEC+ December output decision. ADNOC chief executive Sultan Al Jaber said the world has drawn nearly one billion barrels from inventories since the war disrupted Hormuz shipping, Reuters reported. The US Energy Information Administration estimates that oil flows through the strait averaged 20 million barrels a day in 2024, about a fifth of global petroleum liquids consumption, and that most of it went to Asia.
What the oil price swing means for India
India imports most of its crude, so a lower oil price eases pressure on the import bill, inflation and the rupee. Indian equities responded. The Sensex rose more than 600 points to an intraday high of 76,358.79 on Tuesday morning, and foreign investors bought ₹3,114 crore of shares on Monday, the Free Press Journal reported, citing Q2 earnings and cheaper crude.
Pump prices have not moved. Government data from the Petroleum Planning and Analysis Cell show Delhi petrol at ₹102.12 a litre and diesel at ₹95.20 on 2 November, the same as through late October. HDFC Sky reported that IOC and HPCL shares rose about 1.7% in early trade, while ONGC, an upstream producer, fell 1.6%. Retail prices that stay fixed while crude falls usually help state fuel retailers’ marketing margins, a theme in our IOC, BPCL and HPCL Q2 profit analysis.
Who is more or less exposed
- Helped by lower crude: oil-importing economies such as India, airlines, paint, chemicals and logistics businesses, and fuel retailers whose selling prices are fixed.
- Hurt by lower crude: upstream oil producers, and refiners and tanker owners that have benefited from wide margins and high war-risk freight rates.
Scenarios to watch
These are conditional scenarios to help frame the news, not predictions.
| If this happens | Possible effect on oil | What it would signal |
|---|---|---|
| A US-Iran agreement is announced and tankers resume normal Hormuz transits | More of the risk premium, which Goldman puts at about $27, could come out of prices | Pricing shifts back to supply and demand |
| Talks continue alongside limited strikes on military targets | Volatile trading around the $100 to $110 range seen this week | The market keeps paying for the chance of escalation |
| Attacks shift to tankers or energy infrastructure after the midterms | A move back towards October’s highs; Gulf News cites analysts flagging $120 | Physical supply risk outweighs diplomacy |
What to watch next
- Results of the 3 November US midterm elections and any change in US policy on Iran afterwards.
- Any formal US response to the Qatar-mediated proposal, and Iranian reaction to the Qeshm strike.
- Tanker transit counts, war-risk insurance and freight rates in the Gulf.
Bottom line
Monday’s 7.6% plunge in Brent was a bet on peace, not a sign of new supply. Tuesday’s rebound after the Qeshm strike showed how fragile that bet is. For India, cheaper crude is welcome, but the strait remains largely shut, and until shipping actually resumes, oil prices are likely to keep swinging sharply on each headline from Washington, Tehran and Doha.
Method note
This analysis compared Reuters reports (via Yahoo Finance and Baird Maritime), The National, Gulf News, OilPrice.com, Newsquawk, the Free Press Journal and HDFC Sky. Where post-settlement quotes differed from settlement prices, settlement prices were used. Retail fuel prices come from India’s Petroleum Planning and Analysis Cell, and Hormuz flow data from the US Energy Information Administration.