Oil rises as hopes for diplomacy offset impact of renewed Houthi attacks

LONDON: Oil prices rose slightly on Tuesday as investors awaited the outcome of diplomatic talks in Tehran, while renewed Houthi attacks on Saudi Arabia highlighted persistent risks.

Brent crude futures were up 45 cents, or 0.39%, at $116.26 a barrel by 0918 GMT, while US West Texas Intermediate crude was up 40 cents, or 0.39%, at $102.16.

Both benchmarks recovered after trading 1% lower on the day earlier in the session.

Saudi Arabia, Turkiye 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, Iranian state media said.

“Prices remain elevated amid persistent geopolitical uncertainties,” said Sugandha Sachdeva, founder of SS Wealth Street, a New Delhi-based research firm, adding that some profit-taking earlier in the session was fuelled by hopes of a breakthrough in talks between the US and Iran.

Iran says ‘very good’ talks held with Makkah pact states

Last week, Brent prices surged to more than $117 a barrel, the highest since April, after a wave of Iranian attacks on tankers around the Strait of Hormuz. Brent prices touched $117 on Monday as well.

Scope for peace looked fragile, however, with renewed attacks by Yemen’s Houthis on key producer Saudi Arabia.

October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways, according to data compiled by a Washington-based think tank that has tracked maritime security incidents worldwide since 2017.

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

Investors were also looking for cues from a general election in Israel on Tuesday, and how foreign or trade policy could change, potentially influencing the course of the conflict in the Middle East.