(Bloomberg) — Oil steadied as traders tracked supply risks in the Middle East, and intensified diplomatic efforts to end the US-Iran war.
Brent traded near $104 a barrel after a three-day drop, while West Texas Intermediate was below $100. At the weekend, Saudi Arabia issued air-raid alerts for Riyadh — the first in the capital since the height of the US-Iran war in March and April — as well as warnings in Red Sea hubs including Yanbu. The kingdom has been facing threats from Iran-backed Houthis in Yemen.
President Donald Trump said in a Fox News interview that he would “probably” be open to a meeting with his Iranian counterpart, Masoud Pezeshkian, on the sidelines of the United Nations General Assembly in New York this week. The US leader is also scheduled to hold a summit with Chinese President Xi Jinping, and may meet with Persian Gulf nations as well.
Qatar’s prime minister, Sheikh Mohammed bin Abdulrahman Al-Thani, said that messages were being passed between the two sides. His country, which like its gulf neighbors has come under missile attacks from Tehran, has been one of the main mediators in the conflict.
Crude has soared this year, as the war disrupted energy shipments through the Strait of Hormuz, the vital artery that connects the gulf to global markets. Admiral Brad Cooper, head of US Central Command, said at the weekend that crude and liquefied natural gas flows through the waterway were now running at a six-month high.
Traders were looking for further signs that Riyadh has been making progress in restoring operations of its East-West pipeline, the conduit that runs across the country to the Red Sea, which was damaged in attacks earlier this month. Saudi Aramco has told refining customers in Europe they will be allocated no crude next month under long-term agreements after the interruption.
Beyond the Middle East, the Moscow Oil Refinery was hit during drone attacks that were part of the largest overnight Ukrainian barrage this year. Kyiv has been pummeling Moscow’s energy infrastructure in a push that’s tightened fuel markets, especially diesel.
The combined conflicts in the Middle East and Europe have boosted inflationary pressures around the world as energy prices surge, with the Federal Reserve raising rates last week. Fed Reserve Bank of Minneapolis President Neel Kashkari said inflation remained too high, and that pressures had broadened beyond the oil-price shock.
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