Oil tumbles nearly 6% and stocks rebound as traders bet diplomacy beats a wider Iran war

Oil prices fell sharply on Monday as traders bet that diplomacy, not a wider war, will decide the next chapter of the conflict with Iran — and the relief rippled through stock markets after one of the year's worst weeks.

Brent crude, the international benchmark, fell 5.9 per cent to $106.65 a barrel in morning trading, according to market reports, while West Texas Intermediate dropped more than 6 per cent to about $97.70. The slide followed a weekend of Qatari-mediated talks in Doha, where Iranian negotiators discussed a proposal that could reopen the Strait of Hormuz within two days if the United States meets several conditions.

Iran's top diplomat said in an interview shared on his Telegram channel over the weekend that no direct talks were being held with the U.S., but that he hoped for "rationality" on the American side. U.S. Secretary of State Marco Rubio has said President Donald Trump prefers a diplomatic resolution.

Stocks claw back Friday's losses

The S&P 500 rose 0.5 per cent in early trading, coming off its third straight losing week, while the Dow Jones Industrial Average gained 391 points, or 0.8 per cent, and the Nasdaq composite climbed 0.7 per cent, according to market coverage Monday morning. By midday the Dow was up 1.05 per cent to 52,314 and the S&P 500 up 0.64 per cent to 7,629, the Motley Fool reported.

Friday had been Wall Street's worst day since June, led by a selloff in artificial-intelligence and tech stocks. Monday's bounce was led in part by companies with big fuel bills: United Airlines rose 5 per cent, Southwest Airlines climbed 3.2 per cent and cruise operator Carnival gained 3.4 per cent. Gold rose about 2 per cent to $3,975.80 an ounce.

Not everything rallied. Oracle fell 6.2 per cent after announcing a $20-billion fundraising plan for AI infrastructure, and chipmaker Marvell Technology dropped 5.7 per cent after announcing a deal to buy Lumentum.

What it means for Canadians

If the oil slide holds, Canadian drivers could see relief at the pump within days — analysts cited Monday pointed to wholesale gasoline and diesel prices implying roughly a 16-cent-per-gallon decline in the U.S., with the national average there possibly falling under $4 a gallon in the next week. For Canada, cheaper crude eases pressure on gasoline prices and on the inflation outlook just days after the Bank of Canada hiked its rate to 2.50 per cent, citing energy-driven inflation risks.

The other side of the coin is the TSX: energy producers fall when crude falls, so the same move that helps drivers trims energy-stock gains. Apple reports earnings after the bell Monday, and Friday brings the U.S. October jobs report — both landing in a week already dominated by Tuesday's midterm vote.

The market's message is conditional, not settled: the Doha talks have produced a draft proposal, not a deal, and traders have repeatedly reversed course on Gulf headlines. A single incident in the Strait — where Iran's Revolutionary Guard said Monday that two tankers had hit mines — could send prices back up before lunch.