Brent crude fell for a second day on Tuesday, closing at $103.60 a barrel, its lowest in about four weeks and almost $10 below Friday's $113.43. It did that even after reports that US forces had struck Iran's Qeshm Island, right at the mouth of the Strait of Hormuz.
Normally, a headline like that would send oil higher. This time it was shrugged off within hours. Traders have decided, for now, that a deal with Iran is more likely than another flare-up.
Why a US strike didn't stop the sell-off
The slide started on Monday, when Brent lost 7.63% to $104.77 and WTI fell 7.4% to $96.46, its worst day since late July. President Trump said Iran wants to "make a deal," and Iran's president said the supreme leader had authorised peace talks. Talks in Qatar ended without a breakthrough, but both sides say contacts continue.
Then, overnight, the Wall Street Journal reported that US forces had hit Qeshm, in what officials called a defensive move to protect shipping. Brent briefly jumped toward $107, then gave it all back. Daniel Richards of Emirates NBD said the strikes had "renewed uncertainty" around the diplomatic opening. The market didn't wait to find out.
This isn't only about headlines. Before the war began in late February, about a fifth of the world's crude and natural gas passed through Hormuz, and oil hit a six-month high at the end of October. Cheaper oil would also ease one of the pressures behind talk of a December Fed hike.
$104.77 and $100: the levels traders are watching
Brent is down 9% in five sessions, and trading on Tuesday was heavy, about 60% above normal. This wasn't a quiet drift. The price is now sitting right on its 50-day average, around $103.50, while the 200-day average near $96 is still well below. The longer-term picture still carries a lot of war premium.
The level to win back: $104.77. That's Monday's close. Getting back above it would erase Tuesday's drop and tell you the strike headlines are starting to matter again.
The floor to watch: $100. Several chart desks, including FXEmpire, see it as the next support. Below that, the market would be pricing a real peace, not just hope.
The risk: talks collapse after a 10% slide
Here's the catch: nobody has signed anything. Iran says talks are authorised, Washington says a deal "could happen," and US forces were still striking Qeshm on Monday night. After a near-10% drop in three sessions, a lot of good news is already in the price.
If the talks stall, the bounce back could be fast, because there's little bad news left in the price.
Ships aren't moving freely yet. Diplomacy has changed the mood, not the tanker traffic.
Who would feel a rebound first: oil producers like Exxon Mobil ($177.46 on Tuesday), the energy ETF XLE ($66.68) and the Canadian dollar (USD/CAD at 1.4010).
What would prove the diplomacy trade wrong
If Brent closes back above $104.77, the bet on a deal is losing its grip. Wednesday's weekly US inventory report from the EIA is the first hard look at supply: a big draw would say the market is still tight. And any sign that talks have stalled would hit fast.
So the next few days aren't really about headlines. They're about tankers. If ships start moving more freely through Hormuz, today's price makes sense. If they don't, this drop may turn out to be early.
Sources: CNBC (3 Nov, updated), The National (3 Nov), FinanceFeeds (3 Nov), Wall Street Journal via The National; market data FMP, closes of 3 Nov 2026.