On November 2, international oil prices fell over 6% amid U.S.-Iran negotiations; U.S. equities plunged during trading hours, and post-market reports claimed the U.S. was attacking Iran’s Qeshm Island—how should we interpret this?

Another surreal script has unfolded—this is November 2, 2026, the eve of the U.S. midterm elections! As U.S. market trading hours began, news outlets reported mutual, positive signals from both the U.S. and Iran indicating willingness to negotiate. Energy markets promptly ignored fresh reports of merchant vessels being attacked in the Strait of Hormuz—and also disregarded the fact that U.S. strategic petroleum reserves have hit a more-than-40-year low. Brent crude plunged up to roughly 7.6% intraday; WTI dropped about 7.4%. U.S. equities opened higher during the session, and gold rose—but subsequently, as various liquidity-related headwinds emerged across tech sectors, U.S. equities sharply reversed (the S&P 500 ultimately fell 0.5%, the Nasdaq dropped 1.1%, and the Dow Jones narrowed its gains significantly, closing up just 0.4%). Gold, too, turned downward during Asian trading hours. After markets closed, U.S. officials confirmed to media outlets that U.S. forces had launched an attack on Iran’s Qeshm Island! Yes—precisely while the two sides were engaged in diplomatic ‘flirting,’ the U.S. Navy struck Iran’s geopolitical nerve center. Thus, what deserves most attention here isn’t how much oil prices fell, but rather the growing divergence between financial markets’ pricing of war risk and actual ground-level military operations—a clear sign that both sides have maintained exceptional secrecy, and that Wall Street has successfully purged volatile long/short positions. Simultaneously, the U.S. appears to have learned how to manage dual-track engagement: smiling at the Iranian government while delivering physical 'communication' to the Islamic Revolutionary Guard Corps (IRGC) with its fists. I. Why did oil prices ignore, during the session, both the new vessel-attack reports and the historically low inventory levels? On November 2, Brent crude futures settled around USD 104.77 per barrel, down 7.6% for the day; WTI settled at USD 96.46 per barrel, falling roughly 7.4%. This was a concentrated market reaction to progress in U.S.-Iran negotiations—investors now understand that such diplomatic developments can swing oil sentiment by approximately 7–10%. From the news front: Iranian President Pezeshkian stated that the Supreme Leader had authorized the government to make decisions regarding negotiations with the U.S. Moreover, Iran and Qatar had held continuous talks over several days aimed at ending the war among the U.S., Israel, and Iran; draft agreements are circulating, and further talks remain possible. The White House reportedly urged Netanyahu not to interfere in U.S.-Iran negotiations. For the oil market, this news carries far greater weight than routine diplomatic statements—after all, the Strait of Hormuz handles transport for roughly one-fifth of global oil and petroleum product consumption. If a U.S.-Iran agreement materializes, the Strait could gradually resume full navigation, causing the geopolitical risk premium previously embedded in oil prices to evaporate rapidly—especially if implementation begins as early as November 2, triggering swift relief sentiment. Hence, even though on November 2 the UK Maritime Trade Operations (UKMTO) recorded attacks on vessels near the Strait of Hormuz and off Saudi Arabia—including one tanker struck by an unidentified projectile roughly 72 nautical miles east of Khafji, Saudi Arabia (with crew unharmed), and another vessel attacked inside the Strait—while the IRGC reported two tankers striking mines in the same area, this shows the market wasn’t oblivious to risks; rather, it was reassessing whether the probability of *new* major incidents had risen *above* past levels!

The U.S. and Iran demonstrate 'willingness to negotiate,' causing global energy prices to plummet.

According to CCTV reports, Iranian Foreign Minister Araghchi stated that the proposal currently on the negotiating table is essentially identical to Iran’s previously announced 'Seven-Day Plan.' This plan specifies Iran’s conditions for reopening the Strait of Hormuz: if Iran’s demands are met, the Strait would reopen on Day Six, and formal U.S.-Iran negotiations would resume on Day Seven. Mediators including Qatar and Pakistan have conducted multiple rounds of consultations on this proposal and put forward suggestions deemed more feasible than the original 'Seven-Day Plan.' According to CCTV International News, Iranian Foreign Ministry Spokesperson Baqaei said on Monday that the Secretary of Iran’s Supreme National Security Council would decide—based on national interests—how to respond to the U.S. letter. Baqaei emphasized that all indirect negotiations between Iran and the U.S. conducted via mediators rest primarily on Iran’s 'Seven-Day Plan,' which has now been streamlined for full implementation within two days—'demonstrating Iran’s goodwill and constructive attitude.' He added, 'Only under this premise can we discuss arrangements for subsequent phases.' However, according to an article by Wall Street Insights, Iran’s Fars News Agency cited informed sources stating that information exchanges between the U.S. and Iran via intermediaries constitute routine practice, and no new progress has occurred through this channel. Iran insists that no further advancement—or any new action—will occur until the U.S. fulfills Iran’s seven stipulated conditions. The source also claimed that the Strait of Hormuz remains fully under Iranian military control, and no U.S. warship dares approach within hundreds of kilometers of the Strait. Ali Vaez, Senior Analyst and Director of the Iran Project at the International Crisis Group, noted: 'There is nothing new here. The Supreme Leader granted the government only limited negotiation authority, with clearly defined red lines.' 'Tehran is willing to negotiate to end the war—but it seeks more than just a pause before the next round of conflict. It wants a durable peace capable of restoring its deterrent capability.' Behind Iran’s tough rhetoric, reports indicate that Supreme Leader Khamenei has ordered senior military commanders to prepare for renewed confrontation with the U.S. and Israel—and to expand Tehran’s retaliatory options—a stance starkly contrasting the diplomatic signals emanating from its top diplomat. Israeli pressure and the approaching U.S. midterms inject further uncertainty into the negotiation outlook. The complexity of this diplomatic maneuvering is further compounded by Israel’s hardline stance and the political timing of the U.S. midterm elections. According to CCTV News, citing Israeli media, Trump and Israeli Prime Minister Netanyahu held a 'direct and sharp' phone call on October 31. Sources said Netanyahu urged Trump to 'immediately resume war against Iran' after the November 3 midterm elections—and expressed concern over current U.S.-Iran negotiations underway in Qatar. For now, Trump prefers to 'let negotiations proceed fully' and does not wish Israel to disrupt the process. Sources added that if negotiations fail, Trump’s position could undergo a 'significant shift.' Meanwhile, high oil prices are weighing on the electoral prospects of the ruling Republican Party, giving Trump stronger short-term political incentives in his diplomatic messaging. Monday’s oil price plunge pushed WTI futures below the psychological USD 100-per-barrel threshold—less than 24 hours before Tuesday’s voting day. Yet analysts note that, for consumers already suffering under prolonged high fuel costs, this price drop arrives far too late.

Oil Steadies After Plunging 7% on Optimism Over US-Iran Talks

3 days ago

Oil prices stabilized after a 7% drop as US and Iran signaled peace talks, easing Middle East war fears. WTI traded near $96 per barrel while Brent closed below $105 amid political pressure over energy costs.

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Oil Steadies After Plunging 7% on Optimism Over US-Iran Talks

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