Crude Oil Drops to $95.78 as Trump Signals Iran Diplomacy

Crude oil prices tumbled on Monday as geopolitical tensions eased and supply concerns faded. U.S. West Texas Intermediate futures dropped 4.5% to close at $95.78 per barrel, while Brent crude lost 3.4% to settle at $100.34. The decline came after President Trump told Fox News he would be open to meeting with Iranian President Masoud Pezeshkian at the United Nations General Assembly, and after deciding against bombing Iran-backed Houthi militants despite pressure from Saudi Arabia.

Why oil fell four days in a row

Oil futures have been on a four-day losing streak as markets reassess the damage from Saudi Arabia’s East-West pipeline closure. JPMorgan analysts said total Middle East oil flows averaged 17.1 million barrels per day over the previous 10 days, about 6.1 million bpd below the 2025 average. The key shift: Saudi Arabia increased exports through the Strait of Hormuz, recovering shipments to just over 4 million bpd in September after falling to 2.4 million bpd in August, the lowest level since at least 2013.

Trump’s diplomatic signal lifts market sentiment

President Trump’s openness to talks with Iran and his decision to hold off on military strikes against Houthi militants sparked a rally in risk assets on Monday. Trump told Fox News he would probably meet with Iranian President Pezeshkian at the U.N. General Assembly this week. The Iranian delegation’s attendance at the UN renewed hopes for a diplomatic solution, lifting stocks, easing oil prices, and causing global bond yields to fall sharply.

Iran’s conditions remain a sticking point

Despite diplomatic signals, Iran’s parliament speaker Mohammad Bagher Ghalibaf said Tehran will not reopen the Strait of Hormuz until all its conditions are met. Ghalibaf stated that Iran’s conditions include lifting a U.S. naval blockade and an end to the war on all fronts. Ryan McKay, director of commodity strategy at TD Securities, noted that without a major escalation, Iran may have lost leverage in the Strait, as Middle East exports have reached about 80% of pre-war levels.

Houthi attacks continue despite price decline

Yemen’s Iran-backed Houthis targeted Saudi Arabia’s capital Riyadh and the port city Yanbu on Saturday with missiles and drones, hitting an Aramco facility at a key oil export hub on the Red Sea. The attacks disrupted some shipments through the East-West pipeline, but Saudi Arabia’s shift to exporting through the Strait of Hormuz has offset the disruption. The U.S. State Department issued a security alert citing risks of unforeseen escalation in the Middle East, warning Americans to exercise vigilance and be aware of possible flight cancellations and airspace closures.

Final Thoughts

Oil prices fell sharply as diplomatic hopes offset supply disruptions. With Trump signaling talks and Saudi exports recovering, the immediate supply crisis has eased, but geopolitical volatility remains a key risk for energy markets.

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