Oil Rises as US-Iran War Intensifies

Crude oil held above $102 per barrel on Tuesday, as investors weighed renewed diplomatic efforts in the Middle East to prevent a wider escalation of the US-Iran conflict. Reports said senior officials from Saudi Arabia, Pakistan, and Turkey met with top Iranian officials on Monday to ease tensions and revive negotiations aimed at avoiding another wave of US-Israeli strikes against Iran. The discussions come roughly a week before the US midterm elections, after which President Donald Trump has repeatedly suggested that military strikes against Iran could resume following months of stalled negotiations. Meanwhile, Saudi-led forces continue to engage Iran-backed Houthi rebels, while Hezbollah is reportedly preparing for another regional conflict in Lebanon after receiving financial support from Iran. These ongoing tensions continue to pose risks to Middle Eastern oil supplies, despite crude flows having recovered to around prewar levels.

Crude oil fell to around $101.5 a barrel on Monday as Saudi Arabia’s defense minister held talks with Iranian leaders in Tehran to ease bilateral tensions. Prince Khalid bin Salman met with Iranian President Masoud Pezeshkian and Supreme National Security Council Secretary Mohsen Rezaei, alongside Pakistan’s army chief Asim Munir and Turkish intelligence chief Ibrahim Kalin. The talks came as Iran-aligned Houthi militants in Yemen repeatedly attacked Saudi Arabia in recent weeks. The ongoing hostilities have some investors worried about the risk of another major disruption to production, refining or export facilities. Meanwhile, the US authorized the release of up to 400,000 barrels from the Strategic Petroleum Reserve on Friday to address a supply disruption at a Louisiana refinery. However, prospects for additional US production remain uncertain, as companies remain reluctant to make major investments amid price volatility and geopolitical risks.

Crude oil fell to around $101 a barrel on Monday as renewed diplomatic efforts to ease tensions between the US and Iran raised hopes of avoiding further disruptions to energy supplies. Security officials from Saudi Arabia, Pakistan and Turkey were expected to meet Iranian leaders to revive negotiations and prevent the conflict from spreading. Prices also came under pressure as crude shipments through the Strait of Hormuz recovered to near prewar levels despite continued attacks on vessels. US Central Command reported that more than 1.5 billion barrels had passed through the strait with American assistance since summer, even as Washington maintained a blockade of Iranian ports. Meanwhile, concerns that sustained high prices could weaken global oil demand added to the downward pressure. However, the diplomatic outlook remains uncertain, with fears that strikes against Iran could resume following this week’s Israeli elections and next week’s US midterm elections.