Oil Prices Slip as Iran Talks Raise Hopes of De-escalation Despite Fresh Houthi Attacks

Oil prices fell by around 1% on Tuesday as renewed diplomatic efforts to ease the US-Israeli war on Iran helped temper concerns about supply disruptions, although fresh Houthi attacks on Saudi Arabia kept geopolitical risks in focus.

Brent crude futures declined by $1, or 0.86%, to $114.81 a barrel by 7:18 a.m. Saudi time. US West Texas Intermediate crude fell 88 cents, also down 0.86%, to $100.88 a barrel. Both benchmarks had dropped by about 1% earlier in the session.

The market retreated after crude prices climbed to multi-month highs last week amid Iranian attacks on tankers around the Strait of Hormuz. Brent rose above $117 a barrel, its highest level since April, and touched $117 again on Monday.Oil Prices Slip as Iran Talks Raise Hopes of De-escalation Despite Fresh Houthi Attacks

Saudi Arabia, Turkiye and Pakistan held talks with Iranian officials in Tehran on Monday in an effort to reduce regional tensions. Iranian state media reported that the four countries agreed to continue discussions aimed at strengthening cooperation on peace and security.

Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, said prices were experiencing profit-taking after their recent rally, as diplomatic initiatives raised hopes of progress in negotiations between Washington and Tehran.

“Crude oil prices are witnessing profit-taking after surging to multi-month highs, as renewed diplomatic efforts in West Asia have raised hopes of a potential breakthrough in negotiations between the US and Iran,” she said.

However, Sachdeva cautioned that prices remained high because of continuing geopolitical uncertainty.

The prospect of de-escalation remains fragile following renewed attacks by Iran-aligned Houthi forces on Saudi Arabia. The group said it had targeted key oil pumping stations along the kingdom’s East-West pipeline, although Saudi confirmation was not immediately available.

Shipping security has also deteriorated. Data from a Washington-based think tank showed that October had become the worst month for attacks on commercial shipping in the Strait of Hormuz and surrounding waterways among the maritime security incidents it has tracked since 2017.

The conflict, which began in February, has placed the Strait of Hormuz at the centre of concerns over global energy supplies. Before the war, the narrow passage carried about one-fifth of the world’s energy shipments.

ANZ Research said the oil market remained vulnerable to pressure across supply chains, transport logistics, inventories and refining. Gulf crude exports had declined for a fourth consecutive week, while flows through the Strait of Hormuz stood at around 60% of normal levels.

Global distillate inventories were also nearly 5% below their five-year average, the bank said.

The combination of reduced exports, disrupted shipping and limited inventories continues to expose oil markets to further price swings. While diplomatic contacts have eased some immediate concerns, renewed attacks could quickly reverse the market’s retreat if supply disruptions intensify.