Oil Prices Fall on Hopes for a Breakthrough in the Iran War
Oil prices fell sharply on 2 November 2026 as hopes grew for a diplomatic breakthrough to end the war between Iran and the United States. The Guardian reported that Brent crude, a benchmark grade of oil used to price much of the world's supply, fell by more than 6.5% to as low as $105.55 a barrel, its lowest level since 16 October.
The U.S.-Israeli war on Iran broke out in late February 2026. Brent rose as high as $126.41 a barrel in April, and the Strait of Hormuz, the waterway through which Gulf oil exports pass, came to a halt. Brent settled at $114.88 a barrel on 29 October.
Iran said that contacts between Tehran and Washington aimed at ending the eight-month war were continuing. Over the weekend of 31 October and 1 November, Qatari officials tried to negotiate the release of more than $6bn in Iranian assets, so that Tehran might allow the strait to reopen. Iran had said on 24 October that it had a two-day plan to reopen the strait.
Reports on 2 November said Iran's supreme leader, Mojtaba Khamenei, had granted powers to his government in its talks with the United States. The same day, Iranian delegates had left the talks in Doha, and a draft proposal for a U.S. deal was being circulated, according to an official.
Financial markets moved quickly. Shares in IAG, the parent company of British Airways, rose 4.2% in London, and United Airlines shares jumped 7% in New York. Airlines have been hurt by high jet fuel costs linked to the war's supply disruptions. Shares of major energy companies fell as oil prices dropped. The yield on 10-year UK government bonds fell by 10 basis points, or a tenth of a percentage point, to its lowest level since 22 September.
Forecasts for prices vary widely. In early October, the U.S. Energy Information Administration, a government statistics agency, forecast Brent would average about $98 a barrel in 2026, up 8% from its previous month's forecast. Forecasters cited on 1 November saw Brent at $105 a barrel in December and averaging $88 in 2027. Under an escalated scenario cited the same day, Brent could climb to $140 a barrel in 2027.
The war has also left its mark on company profits and household bills. Nine of the world's biggest oil firms are on track to share more than $95bn in profit in the third quarter, according to The Guardian. Saudi Aramco and BP are among the companies benefiting from fuel prices that have soared because of the war. Heating oil, widely used to warm homes in winter, has more than doubled in cost since the war began.
