Saudi Iran talks cool crude while gold climbs back above $4,000
Oil snapped a three-day winning streak on Monday as Saudi Arabia's defense minister met Iranian leaders in Tehran, while gold rebounded from a three-month low as softer crude eased inflation worries.
Diplomacy took some heat out of the oil market on Monday. Saudi Iran talks in Tehran, with Pakistani and Turkish officials also at the table, gave traders a reason to trim the war premium in crude, and gold used the breathing space to recover the $4,000 level ahead of the Federal Reserve meeting.
What happened
West Texas Intermediate settled at $101.76 a barrel, down 1.46%, and Brent settled at $115.81, down 0.78%, ending three straight gains, according to The Edge's commodities wrap. Brent briefly traded above $117 earlier in the session before the talks dominated headlines.
Saudi Arabia's defense minister sat down with Iran's president and the top official of Tehran's national security council to try to lower tensions, with Pakistan's army chief and the head of Turkish intelligence participating, The Edge reported, citing CNBC. The Financial Times reported that Iran was hosting officials from Saudi Arabia, Pakistan and Turkey after a visit by Qatari officials, CoinDesk noted. Yet the Houthis said they fired missiles at Riyadh's airport and drones at oil pumping stations the same day, claims the Saudis had not confirmed.
Gold moved the other way. Spot gold rose 0.6% to $4,020.60 an ounce after touching $3,975 on Friday, its lowest since July 20, and December futures settled 0.8% higher at $4,038.40, CNBC reported.
Why it matters
The two moves are linked through inflation. Cheaper oil eases pressure on prices, which makes it less likely the Fed will have to keep raising rates, and that helps a metal that pays no interest. "There's been a bit of a pullback in crude oil, which is helping gold," said Bob Haberkorn of StoneX. CME's FedWatch showed about an 80% chance of a December hike, CNBC said.
Gallo Partners' Michael Alfaro put the geopolitical risk premium in crude at roughly $20 a barrel, The Edge noted, which shows how much depends on talks like these. The Saudi Iran talks come after a month of attacks on Gulf energy sites, which we tracked when the Houthis hit Saudi oil facilities. Gold had slipped below $4,000 for the first time since July last week.
What's next
The Fed decides on Wednesday, and September PCE inflation follows on Thursday. For crude, the question is whether the Saudi Iran talks produce anything concrete or whether new strikes rebuild the premium. The settlement data are in The Edge's commodities wrap.
The call
We say WTI will not trade at or above $120 a barrel at any point in November. Polymarket's "Will WTI Crude Oil (WTI) hit (HIGH) $120 in November?" market priced No at 86% at 08:21 MSK on Oct. 27. WTI settled near $102 on Monday and would need a rise of roughly 18% to get there, which likely requires a fresh supply shock rather than more of the same.
This article is for information only and is not investment advice. Calls are editorial forecasts, logged with market odds at the time of publication and kept on the record.