Market moves
Oil retreated on Tuesday, erasing earlier gains and slipping over 2% after reports emerged of a mediation proposal that might satisfy both Washington and Tehran. At 11:07 ET (15:07 GMT), Brent crude futures for December delivery had fallen 2.3% to $106.99 a barrel. U.S. West Texas Intermediate crude futures for December delivery dropped 2.2% to $96.33 a barrel.
Mediation report
The New Arab published details of what it called a "middle ground" proposal, citing sources familiar with the mediation process. According to that report, Qatar and Pakistan have taken leading roles as intermediaries between the U.S. and Iran. The proposal reportedly would make roughly $6 billion in Iranian funds frozen in Qatari banks available as a partial response to Tehran's demands to unfreeze assets. The plan also reportedly includes Iran consenting to undisclosed visits by the International Atomic Energy Agency to some of its nuclear sites.
Price context and earlier strength
Before the drop, Brent had been trading close to a five-month high. Prices had climbed earlier in the session as market participants weighed fresh incidents affecting tankers and continued strikes by Houthi forces on Saudi energy infrastructure. On Monday Brent settled near that multi-month peak despite earlier intraday weakness linked to reports the U.S. and Iran may have achieved progress in mediated talks.
Analysts at Deutsche Bank noted the earlier dip did not persist. Prices rose again after comments from Iran's First Vice President, who said the country had "no choice but to exercise sovereignty" over the Strait of Hormuz, heightening fears of supply interruptions at the crucial maritime chokepoint.
Strait of Hormuz and shipping flows
Recent strikes on vessels in the vicinity of Hormuz have impeded the passage of oil through the waterway. Reporting indicates the strait had been largely closed since the start of a joint U.S.-Israeli assault on Iran in late February. Despite that closure, shipping data suggested some recovery of supplies last month.
U.S. Energy Secretary Chris Wright was cited as saying Gulf crude flows had returned to about 80% of pre-war levels, while noting that shipments of refined products remained constrained.
ANZ analysts warned in a note that the recent uptick in flows now appears at risk. They pointed to preliminary indicators suggesting another slowdown, driven by intensifying attacks on ships operating in the Gulf.
Incidents and allegations
Iran's Islamic Revolutionary Guard Corps claimed an oil tanker struck a naval mine and caught fire in the strait. That incident could not be independently verified. The National reported the vessel was allegedly on an unauthorised route, but it remained unclear whether the incident was connected to a U.S.-backed shipping corridor that runs along Oman’s coast.
Houthi operations and Saudi targets
Separately, Iran-backed Houthi forces in Yemen claimed responsibility for renewed assaults on energy, military and transport facilities in Saudi Arabia. The Houthi claims covered attacks on an Aramco facility in Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh and Abha airport.
Those attacks come amid a Saudi-backed offensive launched earlier this month by internationally recognized government forces in Yemen aimed at reclaiming territory held by the Houthis.
Contributors
Scott Kanowsky and Anuron Mitra contributed to reporting on the events described above.