Oil Drops $8.41 a Barrel in Sharpest Fall Since July

International Brent crude oil closed Monday at $104.77 per barrel, a decline of 7.6% that marked the steepest single-day percentage drop since July 27.

U.S. crude oil mirrored that move, falling 7.3% to $96.46 per barrel. Both benchmarks recorded their largest single-day losses in dollar terms since April 17.

Market participants reacted to reports suggesting the United States and Iran would continue diplomatic engagement rather than expand military operations.

Earlier in the day, Iran’s IRNA news agency quoted the president as saying the supreme leader gave the government authority to seek resolution through dialogue with enemies. Traders interpreted this as a signal that Tehran preferred negotiations via mediators over further strikes on American allies in the region.

That news followed a Sunday report from Axios stating that President Donald Trump wanted to let negotiations play out for now. After the market closed, NBC News asked the president if he was considering striking Iran after the midterms. He answered “No” twice.

As his response spread online, prices continued to fall. Trump later told reporters in Washington that oil was down $10 and would likely drop further because the administration was winning against Iran. He posted on social media that Iran wants a settlement soon.

Energy analysts warn that markets remain vulnerable to new risks. Francisco Blanch, an analyst at Bank of America, wrote in September that major damage to energy infrastructure could push prices to $150 per barrel. He noted that if skirmishes restrict oil flows through the end of the year, Brent crude could trade between $95 and $120 per barrel.

Global oil prices have risen approximately 45% since the conflict with Iran began in late February. This surge has pressured consumers worldwide. Diesel fuel presents a separate challenge for the U.S. economy. Diesel futures fell 5.4% on Monday, their largest one-day drop since May 6.

Despite that recent slide, diesel prices are up nearly 110% since the start of the year. The average U.S. nationwide diesel price reached $6.29 per gallon as of Monday morning, a 77% increase from early in the year. Ukrainian strikes on Russian refineries have damaged diesel supply, compounding the effects of the Iran war on global fuel costs.