Oil prices slipped more than 3% on Monday after Iranian and Qatari officials held a third straight day of talks aimed at pushing for a deal to end the US-Israeli war on Iran.
Brent crude futures fell $3.68, or 3.2%, to $109.75 a barrel by 0407 GMT while US West Texas Intermediate crude was at $100.69 a barrel, down $3.43, or 3.3%.
Brent ended October at its highest in six months amid concerns that the US-Iran conflict could escalate again after Tuesday's US midterm elections.
"Oil is seeing a technical pullback this morning after last week’s strong gains," said Tim Waterer, chief market analyst at KCM Trade.
"Lingering hopes of some form of diplomatic progress, combined with the absence of any meaningful military escalation over the weekend, have taken some of the immediate heat out of prices for now."
However, the market remained alert to the possibility that rhetoric around Iran could be ratcheted higher and push Brent toward $120 after the midterm elections, Waterer said.
Iranian Foreign Minister Abbas Aragcchi said on Sunday that the purpose of the "ongoing and progressing" talks was to continue consultations with the Qatari mediators, adding Tehran was prepared for "both defense and diplomacy".
The talks come amid attacks on oil tankers transiting the Strait of Hormuz that are driving up global energy and shipping costs.
"The price action in oil in recent weeks reflects a market increasingly bracing for the potential for more hostilities between the US and Iran," ING analysts said in a client note.
"If the midterms pass with neither strikes nor a deal, the key question is whether the market continues to price in a substantial geopolitical risk premium or whether that premium gradually begins to unwind."
The Organization of the Petroleum Exporting Countries and allies including Russia, or OPEC+, kept December production targets steady on Sunday, confirming expectations that more policy adjustments will not occur until next year, as the group continues to struggle with export disruptions from the Iran war.
