Oil prices edged lower on Tuesday as fresh diplomatic efforts to ease the US-Israeli war on Iran raised hopes of fewer supply disruptions. But renewed attacks on Saudi Arabia kept traders wary, with crude prices still hovering near six-month highs.
Brent crude futures fell 1.17 percent to $114.64 a barrel, while US West Texas Intermediate (WTI) crude dropped $1.04, or 1.02 percent, to $100.72 by 10:42am Pakistan Standard Time.
The decline came after Saudi Arabia, Turkey and Pakistan held talks with Iranian officials in Tehran on Monday in an effort to ease regional tensions. Saudi Arabia said the visit aimed to open channels for negotiations and prevent another military escalation, according to CNBC.
Iranian state media reported that the four countries had agreed to continue discussions on strengthening cooperation for peace and security.
For oil traders, the talks offered a reason to hope that the conflict might ease and energy supplies could face fewer disruptions. However, the latest developments on the ground suggest that a return to stability remains far from certain.
Fresh attacks by Iran-aligned Houthi forces on Saudi Arabia have added to those concerns, limiting the decline in crude prices.
Security risks have also mounted around the Strait of Hormuz and nearby waterways. October has recorded the highest number of attacks on commercial shipping in the area, according to data compiled by a Washington-based think tank that has tracked maritime security incidents since 2017.
The waterway remains one of the biggest pressure points for global energy markets. Before the war began in February, around one-fifth of the world’s energy supplies passed through the Strait of Hormuz. Any prolonged disruption could therefore push up oil prices and raise fuel costs across the world.
The market has already seen how quickly tensions can move prices. Brent crude climbed above $117 a barrel last week, reaching its highest level since April after a series of Iranian attacks on tankers near the strait. Prices touched the same level again on Monday, highlighting how sensitive traders remain to developments in the conflict.
Meanwhile, a separate development in Russia could offer some relief to fuel markets.
Russian refiners are raising diesel production in October after the government granted export quotas following a supply agreement between Moscow and Washington, two industry sources familiar with the matter said.
Oil markets remain caught between hopes of a diplomatic breakthrough and the risk of further attacks. Until tensions ease and shipping routes become safer, any relief in prices could prove short-lived.
