Oil prices fell sharply on Monday, November 9, on hopes that the United States and Iran could reach a deal to reopen the Strait of Hormuz. Prices slipped again early Tuesday.
The numbers
- Brent crude, the world benchmark, dropped by roughly 5 to 7 percent on Monday, depending on the time measured, to around $92 a barrel.
- U.S. crude (WTI) traded near $87 a barrel early Tuesday.
- Brent had already fallen more than 16 percent the week before, its biggest weekly drop since April 2020.
Why prices fell
Traders reacted to news that Qatar's prime minister was bringing an Iranian proposal to the White House. Reports say it would see Iran reopen the Strait of Hormuz and stop attacks on tankers, in exchange for the United States easing its naval blockade and releasing frozen Iranian funds. President Trump also said new U.S. strikes on Iran were "highly unlikely" while talks make progress.
There is no deal yet. Secretary of State Marco Rubio called some of Iran's demands "outrageous," and analysts warn that prices are moving on hope, not on a signed agreement. If fighting picks up again, much of the recent drop could quickly reverse.
What it means at the pump
Lower oil prices usually reach gas stations within one to two weeks. Some drivers are already seeing relief: in Ottawa, for example, gas fell about 9 cents a litre on November 6, to around $1.59, the lowest since early August.
Prices would likely stay lower only if ships can move safely through the Strait of Hormuz again. Even then, attacks on tankers in the area would keep some risk built into prices.
Other things moving the market
Even before the talks, the world was producing more oil than it was using. JPMorgan estimates the market had a surplus of about 1.1 million barrels a day in September and 1.4 million in October, which also pushes prices down.
What to watch next
Monthly oil market reports come from the U.S. Energy Information Administration on Tuesday, OPEC on Wednesday and the International Energy Agency on Friday. The biggest factor, though, is whether Washington and Tehran reach an agreement.
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