Oil prices decline as Iran peace hopes ease supply fears ahead of Fed decision

Oil prices fell on Tuesday, October 27, extending their retreat from recent highs as renewed diplomatic efforts involving Iran encouraged profit-taking, although continuing threats to Saudi Arabian energy infrastructure limited the decline.

Crude remained elevated following last week's rally, with traders balancing the possibility of reduced Middle Eastern tensions against persistent risks to regional production and shipping.

Price overview

Brent crude futures traded at $110.08 a barrel at 10:25 GMT, down 1.45%.

US West Texas Intermediate (WTI) futures traded around $101.25 a barrel in the latest available quotation, down 1.96%.

Iran diplomacy weighs on oil

Oil prices came under pressure as investors reassessed the prospects for negotiations involving Iran, following indications that Washington could pursue a diplomatic agreement rather than further military action.

The possibility of de-escalation encouraged traders to reduce positions accumulated during last week's rally.

However, uncertainty surrounding negotiations continued to prevent a sharper decline.

Saudi supply risks remain

Recent attacks on Saudi Arabian infrastructure and threats to regional shipping routes have maintained concerns about potential supply disruptions.

Although some affected operations have resumed, traders remain cautious about further missile and drone attacks.

Any disruption to major production facilities or export terminals could quickly restore upward pressure on crude prices.

Federal Reserve decision

Investors are also preparing for the Federal Reserve's October 27–28 policy meeting.

The central bank is expected to leave interest rates unchanged, although persistent inflation and higher energy costs could strengthen expectations of further tightening.

Higher borrowing costs could weaken economic activity and reduce oil demand.

Market outlook

Brent faces immediate support around $109.25, with resistance near $111.

WTI could find support around $100.34, while resistance stands near $103.13.

Oil's near-term direction will depend on developments in Iran negotiations, the security of Saudi energy infrastructure and signals from the Federal Reserve.