Key Points
- Dubai crude falls to $95.71 a barrel, down $12.12 or 11.24 per cent from its Friday reference
- Abu Dhabi’s Murban crude declines to $106.73, shedding $12.09 or 10.18 per cent
- Iran-Qatar talks raise hopes of reopening the Strait of Hormuz, although tanker attacks keep supply risks elevated
ISLAMABAD: Physical crude oil prices fell sharply in Asian trading on Monday as diplomatic efforts to end the US-Israeli war on Iran raised hopes of easing tensions and restoring normal energy shipments.
Dubai crude, the principal pricing reference for Middle Eastern oil supplied to Asian refiners, was indicated at $95.71 a barrel, down $12.12, or 11.24 per cent, from its Friday reference of $107.82, according to Prism’s cash-market pricing service.
Abu Dhabi’s Murban crude, another key physical grade for Asian buyers, fell to $106.73 a barrel, $12.09, or 10.18 per cent, from its Friday reference of $118.82.
The quotations were timestamped during Sunday evening in the United States, corresponding to Monday morning in Asia. They represent indicative cash-market prices rather than exchange-traded futures or official Platts and Argus assessments.
The sharp retreat followed a rally in physical crude prices in October as the conflict disrupted regional energy supplies and raised concerns over the security of shipments through the Strait of Hormuz.
Diplomatic Hopes Ease Supply Concerns
The immediate pressure on prices came from continuing diplomatic contacts between Iran and Qatar.
The two countries’ officials held a third consecutive day of discussions in Doha on Sunday to advance efforts to end the conflict, dampening oil market sentiment.
Iranian Foreign Minister Abbas Araghchi said consultations were progressing, although no final agreement had been reached.
The proposal reportedly envisaged reopening the Strait of Hormuz within two days of an agreement, potentially restoring an important route for international energy shipments.
US President Donald Trump has also expressed hope that the negotiations could end the Iran war. Still, renewed military action remains a concern for energy markets.
The diplomatic developments have encouraged expectations that restrictions on regional shipping could eventually ease, reducing the geopolitical premium built into physical crude prices.
However, the security situation remains uncertain. Attacks on commercial vessels and restrictions on tanker movements continue to complicate oil movement through the Gulf.
Oil supplies still under pressure
Despite the decline in crude prices, refined petroleum product availability remains a separate concern, particularly for Asian economies heavily dependent on Middle Eastern energy supplies.
Asia’s crude imports recovered to 26.39 million barrels per day in October, approaching the pre-conflict average of 27 million barrels per day.
However, imports of refined products, including diesel and gasoline, remained around 10 per cent below their pre-war average.
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Disruptions to the regional refining capacity and continued restrictions on oil shipments have kept fuel prices elevated even as crude supplies have improved.
For importing countries, lower crude oil prices do not necessarily translate immediately into cheaper diesel, petrol or other refined fuels.
Meanwhile, the seven core members of the Organisation of the Petroleum Exporting Countries and their allies, collectively known as OPEC+, decided on Sunday to maintain December production targets at existing levels.
The decision by Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman reflected uncertainty over the conflict and the outlook for global energy supplies.
For physical oil markets, the next direction will depend on whether diplomatic progress leads to a sustained reopening of the Strait of Hormuz and more reliable deliveries to Asian buyers.
Monday’s sharp decline indicated that some of the geopolitical premium has begun to unwind. However, shipping risks and refined-product shortages mean energy markets remain vulnerable to further developments in the Middle East.
