Brent drops 6.1% while OPEC+ holds December output targets
Oil futures fell more than 5% on Monday as renewed diplomatic efforts to end the conflict between the U.S. and Iran eased concerns about Middle East oil supplies. Brent crude futures for January delivery dropped 6.1% to $106.52 a barrel. U.S. West Texas Intermediate futures for December delivery also fell 6.1%, to $97.83 a barrel, while January futures lost 5.8% to $96.19 a barrel.
The decline reversed some of the previous week’s gains and followed an October rally that pushed Brent to its highest level in six months. Market attention centered on signs that Washington and Tehran were pursuing another diplomatic opening.
Iranian President Masoud Pezeshkian said the country’s supreme leader had given the government certain powers as it sought to resolve the conflict through dialogue, according to the state-run IRNA news agency on Monday. U.S. Vice President JD Vance had also sent a message to Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, in an effort to restart peace talks, The Wall Street Journal reported.
The diplomatic signal did not settle the military outlook. The Wall Street Journal reported that the U.S. told several Gulf Arab countries to prepare for a possible short, intense military campaign against Iran after Tuesday’s midterm elections. President Trump had not made a final decision on renewed strikes, the report said.
Seven OPEC+ producers agreed on Sunday to keep their oil production targets unchanged for December, maintaining September’s production levels. The group, which includes Saudi Arabia and Russia, is scheduled to meet again on Nov. 29 to review output levels for January.
The decision came as oil producers continued redirecting exports around the Strait of Hormuz following months of disruptions. Loadings at the United Arab Emirates’ Fujairah port and Omani terminals outside the strait were running 36% above prewar levels, while Red Sea shipments were 8% higher, according to Kpler.
OPEC’s oil production remained more than 3 million barrels a day below prewar levels in September despite an increase in output, according to producer-group data reported by The Wall Street Journal. The figures showed constraints on regional supplies even as exporters found alternative routes to international markets.
Goldman Sachs raised its oil price forecasts while citing persistent Middle East supply risks. The bank now expects Brent to average $105 a barrel in December and $88 a barrel in 2027, up from previous forecasts of $90 and $80, respectively.
Goldman estimated that a geopolitical risk premium of around $27 a barrel accounted for most of October’s oil-price rally, while Brent’s fair value remained broadly stable in the $90s as global inventories changed little. The bank said Brent could reach $140 a barrel next year if Gulf production remained significantly below prewar levels. It could fall into the $60s if output recovered faster than expected following a lasting U.S.-Iran agreement.
Security risks persisted over the weekend. The Saudi-led coalition said Sunday that it had carried out a military operation targeting resources used by Yemen’s Iran-backed Houthi militants to support their missile and drone programs. Saudi air defenses separately intercepted and destroyed a ballistic missile launched by the Houthis toward the kingdom’s southern region, according to the Saudi Press Agency.
Market prices reflected a narrower set of expectations than the supply and security data alone. Diplomatic moves reduced immediate concern about another disruption, while unchanged OPEC+ targets, production below prewar levels and continued military activity left oil markets sensitive to whether dialogue produced a lasting agreement and whether Gulf output returned to earlier levels.