Oil prices edged lower on Tuesday as the potential for a resolution to the U.S.-Israeli war on Iran eased supply concerns. Brent crude futures fell 66 cents, or 0.57%, to $115.15 a barrel, while U.S. West Texas Intermediate crude dropped 44 cents, or 0.43%, to $101.32. The price easing follows talks aimed at preventing further military escalation in the Middle East.
On Monday, officials from Saudi Arabia, Turkey, and Pakistan met with Iranian representatives in Tehran. Saudi Arabian officials said the visit intended to establish open negotiating channels to avoid a return to active military escalation. Iranian state media reported that the four nations agreed to continue discussions to strengthen cooperation in peace and security. Despite these talks, Brent prices remained near six-month highs due to ongoing security concerns.
Market losses were limited by continued attacks on Saudi Arabian infrastructure by Iran-aligned Houthi forces. Additionally, data from a Washington-based think tank indicated that October has seen the most attacks on commercial shipping in the Strait of Hormuz and nearby waterways since its record-keeping began in 2017. Last week, Brent prices peaked at more than $117 a barrel, the highest level since April, following a wave of Iranian attacks on tankers around the strait. Brent prices also touched $117 on Monday.
What happens next depends on the progress of the newly established diplomatic channels between Tehran, Riyadh, Ankara, and Islamabad. While the four countries have agreed to maintain open communication, market participants will continue to monitor shipping safety in the Strait of Hormuz and the impact of Russian diesel export quotas throughout the remainder of October.