U.S. crude futures fell below $100 a barrel on Monday as reports indicated that the United States and Iran were pursuing diplomatic avenues amid ongoing tensions in the Middle East.
Brent crude futures for January delivery declined 4.61% to $108.20 a barrel at 5:49 a.m. ET. West Texas Intermediate futures for December fell 4.44% to $99.50 per barrel.
U.S. Secretary of State Marco Rubio said President Donald Trump preferred a diplomatic resolution to the conflict with Iran rather than military action. Rubio added that the United States had the capability to act militarily if necessary, but would rather reach a peaceful outcome.
Iranian authorities also indicated that an agreement remained possible after two days of talks mediated by Qatar, according to Al Jazeera. Tehran said any deal would depend on its demands being implemented in a tangible way.
The diplomatic signals emerged alongside reports that both countries were preparing for possible renewed military strikes after the Nov. 3 midterm elections. Reports from The Wall Street Journal and The New York Times said the United States was preparing for potential military action, while Iranian Supreme Leader Mojtaba Khamenei called on the country's armed forces to respond immediately and without geographic restrictions to any threat.
Analyst Tamas Varga of PVM Oil Associates said attacks on ships and refineries in the Middle East, as well as attacks on civilians in Ukraine, continued to undermine confidence in the prospects for lasting ceasefires. He nevertheless said hopes for a diplomatic breakthrough remained.
Sources: CNBC Markets.