Oil Prices Dip as Hopes of US-Iran Talks Offset Middle East Tensions

Oil prices edged lower on Tuesday by about 1 per cent as prospects ‌for a resolution of the US-Israeli war on Iran kept supply fears at bay with talks in Iran, despite renewed Houthi attacks on Saudi Arabia.

Brent crude futures were down $1 or 0.86 per cent to $114.81 a barrel, while US West Texas Intermediate (WTI) crude was down 88 cents or 0.86 per cent to $100.88 per barrel.

Renewed diplomatic efforts in West Asia have raised hopes of a potential breakthrough in negotiations between the US and Iran.

Saudi Arabia, Turkey and Pakistan held ⁠talks with Iranian officials in Tehran on Monday aimed at easing tension in the Middle East.

The four countries agreed to continue talks with a view to strengthening cooperation in peace and security.

Market analysts, however, remain worried about renewed attacks by Iran-aligned Houthis on key oil producer Saudi Arabia.

In the past weeks, the Iran-aligned Houthis in Yemen have expanded their strikes on targets in Saudi Arabia with hits on infrastructure, including a strike near the Shaybah oilfield.

The Houthis say they are responding to the offensive of the Saudi-led coalition in Yemen, which is seeking to reclaim territory in the southwest on the Red Sea and the critical Bab el-Mandeb Strait.

Egypt’s parliament on Monday authorised military support to defend Saudi Arabia, the same day Yemen’s Houthis claimed unconfirmed attacks on pumping stations along the kingdom’s East-West crude pipeline and on Riyadh’s King Khalid International Airport.

The 740-mile-long East-West pipeline, also known as Petroline, has helped Saudi Arabia divert most of its crude oil exports away from the choked Strait of Hormuz and ship increasingly larger volumes via Yanbu on the Red Sea.

The pipeline was down for two weeks following the September 10 attacks on pumping stations, before resuming operations and boosting flows to 5.8 million barrels per day in recent weeks.

Reuters reported that October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways, citing data from a US-based think ⁠tank, among worldwide maritime security incidents it has tracked since 2017.

The war rippling across the Middle East placed the Strait of Hormuz at the centre of the turmoil. The narrow waterway carried around a fifth of ⁠the world’s energy supplies before the conflict erupted in February.

Gulf crude ⁠exports fell for a fourth straight week, and flows through the Strait of Hormuz were just about 60 per cent of their normal level, while global distillate inventories held nearly 5 per cent below their five-year average.

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Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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