Brent Falls Over 6% as Iran Talks Lift Hopes of a Deal
Brent crude fell to $105.55 a barrel, its lowest since 16 October, as signals from Tehran and Washington raised hopes of ending the Iran war.
Oil dropped sharply on Monday as signs of progress in talks between Iran and the United States fed hopes of an end to the eight-month war. Airline shares rose and government bond yields fell with it.
A two-week low for Brent
Brent crude, the international benchmark, slid more than 6% at one point to $105.55 a barrel. That is its lowest level since 16 October.
The move spread beyond the oil market. IAG, the parent of British Airways, gained 4.2% in London, while United Airlines jumped 7% in New York. British 10-year government bond yields dropped 10 basis points, a tenth of a percentage point, reaching the lowest level since 22 September.
Cheaper oil also raised hopes that inflation, which is squeezing the global economy, might ease.
What Tehran and Washington said
Iranian foreign minister Abbas Araghchi told state media IRNA that contacts continue. "Consultations through mediators are very intensive," he said, adding that Iran has set out its conditions and proposals. US vice-president JD Vance said he had held several good conversations with the Iranians and felt good about the prospects of a negotiated settlement.
Vance sent a letter last week to Mohsen Rezaei, Iran's security chief. The White House has said little about what it contained.
At the weekend, Qatar's officials worked on freeing more than $6 billion of Iranian assets, a step that could lead Tehran to reopen the strait of Hormuz. Reports on Monday also said Iran's supreme leader, Mojtaba Khamenei, had given his government authority in the talks.
Trump's mixed signals
Tone from the US president was harsher. At a campaign rally in Iowa on Sunday, Donald Trump said he wanted to be nice and save lives, but that "at some point we're going to have to give them the hammer".
Chris Beauchamp, chief market analyst at IG, said the news was welcome for stock markets, which had felt pressure from rising oil. He warned that Trump could still make one last attempt after the midterm elections.
Our View
Monday's price move rests on talk, not a signed agreement. Brent may also react to whether the Qatari effort to release Iranian assets succeeds and Hormuz reopens. The midterm vote is the date to watch, since the analyst's warning ties the risk of a harder line to the period after it.
Source: the Guardian