NEW: Oil Prices React Sharply To Developments In Middle East

Oil prices plunged Monday as signs of a potential breakthrough in President Donald Trump’s negotiations with Iran sent a wave of relief through global markets, raising hopes that an end to the eight-month war could finally be within reach.

Brent crude, the international oil benchmark, tumbled more than 6.5% to $105.55 per barrel, its lowest level since Oct. 16, after Iranian officials confirmed that diplomatic discussions with Washington were continuing.

The sharp decline offered welcome news for consumers and businesses struggling with soaring energy costs, while airline stocks surged on the prospect of cheaper fuel.

The market reaction came after Iranian Foreign Minister Abbas Araghchi acknowledged that negotiations were progressing through intermediaries, although Tehran continued insisting that Washington meet its demands.

“Consultations through mediators are very ⁠intensive. We have presented our conditions and ⁠proposals and everything depends on the political ​rationality of Washington,” Araghchi said, according to Iranian state media outlet IRNA.

His remarks followed reports that Iran’s supreme leader, Mojtaba Khamenei, had authorized additional negotiating powers for government officials involved in discussions with the United States.

Investors interpreted the development as a possible opening toward ending a conflict that has rattled financial markets and disrupted global energy supplies for months.

But the diplomatic movement comes as Trump continues applying pressure on Tehran, warning that his administration remains prepared to take further military action if negotiations collapse.

During a campaign rally in Iowa on Sunday, the president delivered a blunt warning to Iranian leaders ahead of Tuesday’s midterm elections.

“The only reason why I’m not finished with Iran is I want to be nice. I want to try and save all those lives if I can … But at some point we’re going to have to give them the hammer,” Trump told supporters.

BREAKING: US oil prices extend losses to -7% on the day, falling below $98/barrel, as US-Iran peace deal hopes return.

Nasdaq 100 futures are now up over +1% today. https://t.co/Rob1pB4wN5

— The Kobeissi Letter (@KobeissiLetter) November 2, 2026

The president’s remarks underscored his administration’s approach to the negotiations, combining the possibility of a diplomatic agreement with continued threats of military force.

Trump also warned that Iran could face “the hammer” if meaningful progress failed to materialize.

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Meanwhile, Qatar has reportedly stepped up efforts to help broker an agreement that could reopen the Strait of Hormuz, one of the world’s most important routes for transporting oil.

Over the weekend, Qatari officials attempted to negotiate the release of more than $6 billion in frozen Iranian assets as part of a potential arrangement to reopen the strategic waterway.

The strait has become a major point of contention during the conflict, with disruptions to shipping contributing to the surge in global energy prices.

Any agreement restoring normal traffic through the passage could ease pressure on international oil markets and help reduce transportation costs.

For Americans, that could eventually translate into relief at the gas pump, although Monday’s decline in crude prices does not guarantee an immediate drop in retail gasoline prices.

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The encouraging developments also provided a boost to financial markets, particularly companies that have been battered by rising fuel expenses.

United Airlines shares jumped 7% in New York, while International Airlines Group, the parent company of British Airways, climbed 4.2% in London.

Government bond markets also responded favorably as investors considered the possibility of easing inflation.

Yields on 10-year British government bonds dropped 10 basis points, reaching their lowest level since Sept. 22.

Chris Beauchamp, chief market analyst at trading platform IG, described the diplomatic developments as a major relief for investors.

“The news is manna from heaven for stock markets, which have felt increasingly pressured by oil’s rise, but of course there is still a risk that Donald Trump will try one last throw of the iron dice after the midterms,” Beauchamp said.

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Despite Monday’s market rally, significant obstacles remain before Washington and Tehran can reach a lasting agreement.

Iran has not publicly committed to reopening the Strait of Hormuz, and negotiations over frozen assets and the broader conflict remain unresolved.

Trump has also made clear that his willingness to pursue diplomacy should not be mistaken for a decision to abandon military options.

With Election Day approaching, the administration faces enormous economic and political stakes as Americans continue grappling with elevated energy prices.

A diplomatic breakthrough could provide substantial relief to consumers while stabilizing financial markets that have endured months of uncertainty.

For now, the possibility of an agreement has already produced a dramatic market reaction, sending Brent crude down more than 6.5% and lifting major airline stocks.

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