International oil prices stabilized after plummeting 7%: the US and Iran sent a signal for negotiations, but differences still exist

The Zhitong Finance App learned that oil prices stabilized after recording the biggest drop in more than three months. As the war in the Middle East enters its ninth month, both the US and Iran have sent signals that they are willing to advance peace negotiations. WTI crude oil traded around $96 per barrel after plummeting 7.4% on Monday; Brent crude closed below $105 per barrel. Iran's president said that Iran's supreme leader has authorized his government to conduct more negotiations, while US President Trump hinted at progress in related discussions.

At a time when oil prices have plummeted, American voters will participate in the midterm elections on Tuesday. Trump and the Republican Party are facing increasing political pressure as the war pushes up energy prices. Trump has said many times that he will resolve the conflict in some way, while threatening to resume attacks on Iran after the election. When asked by reporters if attacks on Iran will resume after the midterm elections, Trump said “no.” Throughout the conflict, he frequently threatened to launch new attacks and claimed progress in diplomacy, but there was no substantial breakthrough.

On Monday, the drop in oil prices affected the entire energy market: European gas futures fell nearly 9%, and US heating oil recorded the biggest drop in six months.

Karen Young, a senior research scholar at Columbia University's School of International and Public Affairs, said, “Given the current high level of tension, it is unreasonable for energy prices to drop like Monday's. But the news is driving market fluctuations, which means that if the US and Israel launch a more aggressive military attack on Iran, energy prices are likely to soar further.”

Prior to Monday's sharp drop, the global benchmark Brent crude rose nearly 14% in October, hitting a six-month high, as markets feared a resumption of hostilities between the US and Iran, despite a recovery in Persian Gulf exports.

However, the prospects for a diplomatic breakthrough remain uncertain. Iran's President Masood Pezzahizyan did not explain the extent of the powers granted by Supreme Leader Mujtaba Khamenei, or whether this meant a broader shift in the red line between Iran's indirect negotiations with the US.

Major differences between the two sides remain. Iran wants the US to lift the maritime blockade on its ports, ease sanctions, and unfreeze assets before completely reopening the Strait of Hormuz; the US demands that Iran make concessions on its nuclear program.