Oil prices fell on Tuesday, posting losses for the second consecutive session, as diplomatic efforts to defuse the US-Israeli conflict with Iran helped ease fears of a wider regional escalation.
By 8:25 a.m., Brent crude oil futures for December delivery had fallen 1% to $114.66 a barrel, while West Texas Intermediate ( WTI ) crude futures had declined 1.1% to $100.69 a barrel.
This decline followed a rally last week that pushed Brent futures to their highest level in six months, fueled by fears of further attacks on energy infrastructure and commercial shipping in the Middle East.
The latest diplomatic efforts are centered around talks involving Iran, Saudi Arabia, Turkey and Pakistan, while Qatari officials have also engaged in contact with Tehran in an effort to prevent the conflict from escalating.
Senior officials from Saudi Arabia, Turkey and Pakistan met with the Iranian leadership in Tehran on Monday, with the aim of easing regional tensions and opening channels for negotiation.
Reports indicated that the talks addressed the Houthi attacks on Saudi Arabia, the possibility of talks between the United States and Iran, the disruptions to shipping through the Strait of Hormuz, as well as the US blockade of Iranian ports.
These diplomatic efforts have helped to alleviate some immediate concerns about further military escalation, but investors remain cautious about whether they will lead to a lasting de-escalation.
US President Donald Trump continued to keep the door open to the possibility of launching further military operations against Iran, while Tehran stressed that any negotiations with Washington would require concessions, including ending the US embargo and lifting sanctions on Iranian oil exports.
Supply risks remain significant, as the conflict with Iran has disrupted commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait, two vital waterways for global energy trade.
The Houthi forces announced on Monday that they had targeted pumping stations on the east-west crude oil pipeline in Saudi Arabia, as well as Riyadh airport, although the kingdom did not immediately confirm these claims. Saudi Arabia has announced the interception of missiles and drones in recent days.
Fatih Birol, the executive director of the International Energy Agency, said on Monday that energy markets are unlikely to return to their pre-war state in 2027, highlighting concerns about the lasting impact of the conflict on supply chains.
Saudi Arabian Oil Company also plans to begin storing crude oil in Singapore during the second half of 2027, an initiative announced by the Saudi and Singaporean energy ministers aimed at enhancing the resilience of the regional supply chain.
