Oil prices extended losses from Asian trade into early Monday morning U.S. time as a draft proposal on a potential end to the U.S.-Iran war is now being circulated after Iranian negotiators left Qatar, an official briefed on the talks told Reuters on Monday.
Oil prices slumped by 3% in Asian trade on Monday amid renewed optimism about a possible peace deal between the United States and Iran, following reports about mediation talks between Iran and Qatar over the weekend.
Iranian negotiators left Qatar on Sunday and a draft proposal is now being circulated for a potential follow-up meeting, the Reuters source said, without elaborating on what the draft proposal could possibly entail.
“Lingering hopes of some form of diplomatic progress, combined with the absence of any meaningful military escalation over the weekend, have taken some of the immediate heat out of prices for now,” KCM Trade’s chief market analyst Tim Waterer said, as quoted by Reuters earlier today.
“Our demands have been articulated very clearly and transparently,” Reuters quoted Iran’s Foreign Ministry spokesman, Esmaeil Baghaei, as saying.
“These demands are reasonable and logical: no final agreement can be initiated, nor can the Strait of Hormuz be reopened or secured, unless the US naval blockade is brought to an end, Iran’s demands are respected, and Iran’s legitimate requirements are addressed,” the Iranian official said.
Iran this weekend said that the Strait of Hormuz could reopen within two days if its demands are met, faster than the week for reopening Tehran had aired in September.
U.S. President Donald Trump rejected Iran’s September proposal.
“It remains to be seen whether this will lead to anything,” ING’s commodities analysts Warren Patterson and Ewa Manthey said in a Monday note, commenting on the Iran-Qatar mediation talks.
Early on Monday, Brent Crude prices had dropped to $108.61, per barrel, down by 4.25% on the day, and WTI Crude slumped by 4.32% to below $100 a barrel, at $99.62.
Still, the market is apprehensive that new U.S.-Israel strikes on Iran could follow the U.S. midterm elections.
“Given that many of the key developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week,” ING’s strategists said.
By Charles Kennedy for Oilprice.com
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