Oil futures advanced on Tuesday after reversing earlier losses, with investors assessing negotiations involving Iran and regional governments alongside reported attacks on Saudi Arabian infrastructure.
At 04:10 ET (08:10 GMT), Brent crude futures were up 0.5% at $116.38 per barrel, while U.S. West Texas Intermediate (WTI) futures increased 0.6% to $102.35 per barrel.
Both contracts had declined earlier in the session. Brent reached a six-month high last week as concerns about potential attacks on energy facilities and commercial shipping in the Middle East affected trading.
Iran Holds Talks With Regional Governments
Diplomatic efforts involving Iran, Saudi Arabia, Turkey and Pakistan continued this week as regional officials sought to address tensions surrounding the conflict involving the United States, Israel and Iran.
Senior representatives from Saudi Arabia, Turkey and Pakistan met Iranian officials in Tehran on Monday to discuss regional security and possible avenues for negotiations.
Qatar has also engaged with Iranian authorities as part of efforts to limit the geographical spread of the conflict.
According to reports, the discussions addressed several issues, including attacks attributed to Iran-backed Houthi forces in Yemen, potential negotiations between the United States and Iran, shipping disruptions in the Strait of Hormuz and the American blockade of Iranian ports.
The diplomatic activity has reduced some immediate concerns about additional military escalation, although the outcome of the discussions remains uncertain.
U.S. President Donald Trump has continued to leave open the possibility of further military operations against Iran.
Iranian authorities have indicated that negotiations with Washington would require concessions, including an end to the blockade of Iranian ports and the removal of sanctions affecting the country’s oil exports.
Capital Economics Examines Impact of U.S. Blockade
Analysts at Capital Economics have assessed the economic consequences of the U.S. naval blockade and the factors that could determine Iran’s response to diplomatic negotiations.
“The U.S. naval blockade that has now been in place for more than 100 days is imposing severe pain on Iran’s economy, with the rial tumbling and inflation at close to 90% y/y. But the extent to which this affects Iran’s negotiating position depends on which faction of the regime is in the ascendency as well as the degree of control that Iran can exert over the Strait of Hormuz,” analysts at Capital Economics said in a note.
The assessment identifies internal political dynamics and Iran’s control over the Strait of Hormuz as factors influencing its negotiating position.
The blockade and restrictions affecting oil exports remain among the issues raised by Tehran in connection with potential talks with Washington.
Houthi Forces Report Attacks on Saudi Oil Pipeline
Houthi forces said on Monday that they had carried out attacks targeting pumping stations on Saudi Arabia’s East-West crude oil pipeline and Riyadh airport.
Saudi Arabian authorities had not immediately verified the reported incidents.
The kingdom has separately reported intercepting missiles and drones in recent days, as regional military activity continues alongside diplomatic discussions.
The East-West pipeline and shipping routes through the Strait of Hormuz remain relevant to assessments of regional oil transportation and supply conditions.
Reports of attacks on energy infrastructure have continued to feature in oil market developments, alongside the potential effects of restrictions on commercial shipping.
IEA Expects Energy Market Disruption to Extend Into 2027
International Energy Agency Executive Director Fatih Birol said on Monday that energy markets were unlikely to return to their pre-conflict conditions during 2027.
His comments addressed the potential duration of changes affecting global energy supply chains following the conflict.
Separately, Saudi Aramco plans to establish crude oil storage operations in Singapore during the second half of 2027.
The arrangement was announced by energy ministers from Saudi Arabia and Singapore and is intended to improve the resilience of Aramco’s regional supply chain.
The planned storage operations form part of the company’s arrangements for managing crude oil supplies in the region.
Oil Traders Assess Supply Conditions and Diplomatic Developments
The latest increase in Brent and WTI futures follows fluctuations in prices as market participants monitor diplomatic discussions and developments affecting Middle Eastern energy infrastructure.
Negotiations involving Iran and neighbouring governments are continuing while restrictions on maritime transport and the U.S. blockade remain unresolved.
Market attention remains focused on whether diplomatic efforts result in changes to shipping access, sanctions on Iranian oil exports or the regional security environment.
The combination of ongoing negotiations, reported attacks and uncertainty surrounding shipping routes continues to shape developments in international crude oil markets.
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