WTI Drops 7.8% to $96.02 as Iran Talks Pull Brent to $104.10, While UBS Sees $110 and Goldman Sees $105

Crude oil fell sharply on Monday as signs of US-Iran diplomacy eased fears over the Strait of Hormuz. OilPrice.com data stamped 21:38 GMT showed WTI down $8.10, or 7.78%, at $96.02 per barrel. Brent was down $9.32, or 8.22%, at $104.10 per barrel at the same time, as relayed by Gulf News. These are snapshot quotes, not official CME or ICE settlements, which we could not confirm at publication.

What moved crude on Monday

Weekend mediation between Iran and Qatar produced a draft proposal to end the war, according to Gulf News. Axios reported that President Donald Trump told Israeli Prime Minister Benjamin Netanyahu he wants to give diplomacy more time before considering further strikes. Trump said, "Either they'll make a deal, or we'll just end it," as quoted by The National. US midterm elections take place on Tuesday.

Diplomacy has not stopped attacks on shipping. The UK Maritime Trade Operations reported a vessel hit by a projectile in the strait and another struck east of Ras Al Khafji on Saudi Arabia's Gulf coast. An LNG tanker was attacked on Friday. Gulf News relayed analyst warnings that "this is hope, not a deal."

Archive callback: what changed since Friday

Our Friday settlement coverage recorded WTI at $104.12 per barrel and Brent January at $113.43. Against those closes, WTI has given back 7.78% and Brent 8.22%. Gulf News reports Brent rose 13.6% and WTI 15.2% in October, so Monday's drop reverses part of a month-long rally.

The Brent-WTI spread narrowed to $8.08 from $9.31 on Friday's closes, a $1.23 tightening. Brent fell further in dollar terms than WTI. That pattern fits the unwinding of a seaborne supply premium, which UBS market analyst Nana Antiedu described as "the geopolitical premium embedded in October's oil rally has partially unwound," per BigGo Finance.

How many days of Hormuz flow have stocks covered?

ADNOC chief executive Sultan Al Jaber said global oil inventories have shrunk by nearly 1 billion barrels since Hormuz shipping was disrupted, per Reuters as summarized by BigGo. Our earlier analysis of the IEA emergency release put 330 million barrels at 16 days of Hormuz flow. That implies 20.6 million barrels per day.

At that rate, a 1 billion barrel draw equals 48.5 days of Hormuz flow. In plain terms, inventories have already absorbed close to seven weeks of the strait's volume. This is our own calculation. Refilling those stocks would add demand once flows resume, a factor the diplomatic headlines do not price.

Forecasters disagree on where Brent lands

The Brent snapshot of $104.10 sits between the major bank views. UBS commodity analyst Giovanni Staunovo sees record freight costs and constrained tanker capacity keeping prices elevated, with a year-end Brent level in the $110 area, per The National. Goldman Sachs analysts raised their December Brent forecast to $105 and expect a 2027 average of $88, per BigGo.

• UBS: Brent in the $110 area at year-end, which is $5.90 above the snapshot.
• Goldman Sachs: $105 for December, $0.90 above the snapshot, then $88 as the 2027 average.
• Saxo: $70 to $90 even after the war, as covered in our earlier forecast comparison.

The horizons differ, so the views are not strictly comparable. Even so, the $22 gap between UBS's year-end level and Goldman's 2027 average shows how much of the current price depends on whether Hormuz reopens. The spread of views frames how much of the price depends on a Hormuz deal.

Pump prices and Canadian heavy crude

AAA put the US national average gasoline price at $4.16 per gallon on Monday, $0.14 lower than a week earlier. Patrick De Haan of GasBuddy said it could fall below $4 next week if conditions hold. Sparta Commodities analyst June Goh said diesel has the tightest supply-demand balance heading into winter.

Canadian producers sell in US dollars, so a lower WTI flows straight into Canadian dollar revenue unless the exchange rate offsets it. Our WCS coverage recorded a US$31 discount to WTI at Friday's close. If that discount held, Western Canadian Select would price at $65.02 per barrel against the $96.02 WTI snapshot. We have not seen a Monday WCS assessment, so treat that figure as illustrative. Imperial Oil, majority owned by ExxonMobil, is among the producers exposed to that spread.