Oil prices took a noticeable step back on Monday, falling more than 3% as markets responded to ongoing diplomatic efforts between Iranian and Qatari officials. The potential for a breakthrough to resolve the conflict has provided some relief to traders, leading Brent crude to drop to $109.75 a barrel, while U.S. West Texas Intermediate saw a similar decline to $100.69. This dip follows a period of significant gains, as investors had previously bid up prices in anticipation of further instability surrounding the U.S. midterm elections.

Market analysts suggest that while the immediate "war premium" is cooling due to a lack of major military escalations over the weekend, the situation remains fragile. Experts like Tim Waterer of KCM Trade note that while diplomatic progress is encouraging, the risk of a price spike toward $120 remains if the political rhetoric intensifies post-election. Meanwhile, OPEC+ has maintained its current production targets, signaling that the group is waiting to see how the geopolitical landscape shifts before making any significant adjustments to global supply in the coming year.