Oil plunges more than 6% from near wartime highs as diplomacy over Iran seemingly gathers pace
Brent crude fell more than 6% on Monday morning, retreating from its highest close since March, as regional mediators headed to Tehran and US President Donald Trump weighed a deal with Iran, while investors braced for a week packed with central bank decisions and earnings reports.
Published on 26/10/2026 - 11:18 GMT+1•Updated 11:23
Oil prices tumbled on Monday morning as diplomatic efforts to calm the Iran war gathered pace and US President Donald Trump said he was weighing a deal with Tehran.
Brent, the global oil benchmark, fell more than 6% from about $117.4 per barrel at Friday’s close to around $110 at the time of writing, while US benchmark West Texas Intermediate dropped about 2% to $101.5 per barrel.
Friday's close was Brent’s highest since 19 March and only about 2% below the $119.5 peak hit in early March, at the start of the Iran war. Before the conflict, Brent traded at around $72 per barrel.
Prices had surged last week after Yemen's Houthi rebels, an Iran-aligned armed group, attacked airports and energy facilities in Saudi Arabia, the world’s largest oil exporter.
However, the mood shifted over the weekend.
Qatari mediators reportedly travelled to Tehran on Sunday in coordination with Washington, while Saudi Arabia's defence minister, Pakistan's army chief and Turkey's intelligence chief were due in the Iranian capital on Monday for regional security talks.
In an interview with Fox News on Sunday, Trump framed it as a choice asking, "do I make a deal with them, or do I finish them off?"
Supply risks have not gone away as the Houthis said they struck Saudi airports and energy sites again over the weekend, while Riyadh reported shooting down further missiles and drones.
Trump touts Hormuz flows
At a campaign event in Port Huron, Michigan, ahead of the US midterm elections, Trump defended his administration's reasons for starting the conflict.
Citing the Wall Street Journal, he also claimed that "oil coming out of the Strait of Hormuz is now topping what it was before the war [...] our navy has been incredible."
The Strait of Hormuz carried about a fifth of the world’s oil before the war.
Gulf crude exports, excluding Iran, returned to pre-war levels in September, according to ship-tracking firm Kpler, but around 40% of them now bypass the strait through pipelines, compared with 17% before the conflict.
Earnings and central bank week
Investors are also bracing for a busy week of rate decisions from the world's major central banks.
In Europe, both the pan-European Stoxx 600 and the Euro Stoxx 50 traded over 0.6% higher than Friday's close.
The UK's FTSE 100, Germany's DAX, France's CAC 40, Italy's FTSE MIB and Switzerland's SMI, all rose between 0.3% and 1% with the German index leading.
Spain’s IBEX 35 and the Netherlands’ AEX both traded flat.
French assets got some relief after ratings agency Moody’s unexpectedly kept France’s Aa3 rating on Friday evening.
In the US, futures on the S&P 500 were 0.3% higher and those on the tech-heavy Nasdaq 100 as well.
The week ahead is packed as the US Federal Reserve announces its decision on Wednesday, and is widely expected to keep rates at 3.75% to 4% before a possible hike in December.
The European Central Bank follows on Thursday, with France's bond market turmoil in focus, and the Bank of Japan on Friday.
Earnings season also peaks, with roughly one in three S&P 500 firms reporting, Alphabet, Microsoft and Amazon among them, while BP and Shell update investors in Europe.
