Oil Prices Drop as U.S. and Iran Diplomatic Hopes Reignite

Oil prices fell sharply on Monday as diplomatic talks between the United States and Iran raised hopes for a quick reopening of the Strait of Hormuz.

Brent crude, the global benchmark, dropped 2.8% to reach $110.24 per barrel. U.S. benchmark crude followed suit, losing 3.1% to close at $100.85. Iranian negotiators are currently in Qatar discussing a proposal that could restore shipping through the strait within two days if Washington meets specific conditions. Iran's top diplomat noted on his Telegram channel that while these talks are ongoing, no direct negotiations are taking place with the U.S. at this time.

Equity markets in Asia showed mixed results on Monday. Japan's Nikkei 225 index slipped 0.3% to finish at 63,081.86. The decline was driven by weakness in the technology sector, where Kioxia Holdings shares plunged 15.8% after the company issued earnings forecasts that disappointed analysts. SoftBank Group, an investor in OpenAI, also dropped 1.6%. In contrast, South Korea's Kospi index rose 2.2% to 5,859.08, supported by gains in Samsung Electronics and SK Hynix.

Investors remain wary of the artificial intelligence sector following a volatile week for U.S. tech stocks. The S&P 500 fell 1.8% on Friday, marking its worst single day since June. The Nasdaq composite, which is heavily weighted toward technology, declined 2.9% during the same session. These moves follow recent earnings reports from Alphabet and Amazon that raised questions about whether massive AI spending will yield timely profits. Sunil Tirumalai of UBS Global Research wrote in a recent note that investors are now focusing on companies with weaker balance sheets or larger financial commitments rather than the tech sector as a whole. He described the situation as having visible cracks, with the central question being whether current spending levels can generate adequate returns.

In other Asian markets, the Shanghai Composite index climbed 1.1% to 3,638.03. This gain occurred despite reports that China's factory activity returned to contraction in October, signaling a potential slowdown in economic momentum. Chinese media reported that the country's central bank and securities regulator met with financial institutions on Monday to discuss market support measures. The Hang Seng index in Hong Kong gained 0.5% to 23,411.49, while the S&P/ASX 200 in Australia lost 0.6% to 8,856.50. India's Sensex index rose 1.3%.

Currency markets saw the U.S. dollar strengthen against the Japanese yen, rising to 157.83 from 157.49. The euro also appreciated, trading at $1.1186 compared to the previous close of $1.1160.

Apple is scheduled to report its latest earnings later in the day. U.S. futures advanced on Monday following Friday's selloff. Investors are also watching Tuesday's U.S. midterm elections, where concerns about AI data centers and inflation are prominent issues among voters.