Oil prices tumbled Monday as hopes rose for diplomatic progress between the United States and Iran. Brent crude fell nearly 7 percent to around $105.60 per barrel, while West Texas Intermediate dropped to about $96.92 per barrel.

The sharp decline wiped out part of the war premium that had lifted prices through October amid concerns over disruptions in the Strait of Hormuz. Both benchmarks slid more than 6 percent at points during the session, with the selloff extending to natural gas and refined products.

Iranian President Masoud Pezeshkian stated that the Supreme Leader had granted the government certain authorities over peace talks, and Tehran would seek to resolve issues through dialogue, according to state media. Foreign Minister Abbas Araghchi noted that negotiators in Qatar were working on a proposal that could reopen the Strait of Hormuz within days if Washington met specific conditions, including an end to the naval blockade, lifting of oil sanctions, and a halt to regional fighting.

On the U.S. side, Secretary of State Marco Rubio indicated over the weekend that no decision had been made on new strikes and that President Trump prefers a diplomatic resolution. Reports also surfaced that Trump told Israeli Prime Minister Benjamin Netanyahu he wanted to give talks more time.

The moves came ahead of U.S. midterm elections on Tuesday. Oil had traded higher last week on fears of potential escalation after the vote. Analysts noted that the market had priced in significant risk premium tied to the eight-month conflict that began in late February.

Technical factors amplified the drop, including commodity trading advisers reducing long positions in Brent. Banks including Goldman Sachs have highlighted that any sustainable diplomatic outcome could lead to lower prices, while prolonged supply risks support higher forecasts.

Markets will continue to monitor developments in the Qatari-mediated talks and any post-election policy shifts from the Trump administration.