Oil Prices Fall as Iran, US Continue Diplomatic Efforts

Oil fell on Monday as the United States and Iran sought diplomatic options to resolve their conflict.

Futures for international reference Brent crude for January, deliveries fell 3.31% to $109.67 per barrel. WE West Texas Intermediate Futures for December fell 3.34% to $100.64 per barrel.

US Secretary of State Marco Rubio said President Donald Trump preferred not to use military force and wanted to resolve the Iranian war “diplomatically”.

Trump “hasn’t made a decision…what the president is expressing to you is incredible confidence that if we needed to do something militarily, we would have the capability to do it, and we really have everything we need to be successful. But we would prefer to do it peacefully,” Rubio said, speaking to reporters over the weekend.

Iranian authorities also signaled that a deal was still possible, after two days of talks mediated by Qatar, provided the demands are implemented in concrete terms, according to Al Jazeera.

This news follows reports that the United States and Iran are preparing for new military strikes after the midterm elections.

Reports from the Wall Street Journal and the New York Times indicate that the United States is preparing for further military actions after the November 3 midterm elections.

Iran’s Supreme Leader Mojtaba Khamenei on Saturday called on Tehran’s armed forces to respond to “any level or type of threat” with “an immediate, impactful response without geographic restrictions.”

Concerns over conflicts in the Middle East and Ukraine are likely to persist in the near term.

“Attacks on ships and refineries in the Middle East and on civilians in Ukraine continue, which inspires little confidence in the prospects for lasting ceasefires in the near future,” said Tamas Varga, an analyst at PVM Oil Associates.

“Nevertheless, hope remains eternal,” Varga added.

—CNBC’s Lim Hui Jie contributed to this report.