Oil Prices Drop Despite Threat of New U.S. Strikes on Iran

Crude oil prices moved lower today after reports about renewed diplomatic efforts to achieve peace in the Middle East, with Saudi, Turkish, and Pakistani officials travelling to Tehran to discuss the prospects of an end to hostilities.At the time of writing, Brent crude was trading at $114.85 per barrel, with West Texas Intermediate at $100.87 per barrel. That’s down from over $117 for Brent crude at the end of last week, and over $103 for WTI, on peace hopes and traders taking profit. However, continued Houthi attacks on Saudi energy infrastructure and Iranian strikes on tankers in the Strait of Hormuz continue to support prices.“Crude oil prices are witnessing profit-taking after surging to multi-month highs, as renewed diplomatic efforts in West Asia have raised hopes of a potential breakthrough in negotiations between the US and Iran,” SS WealthStreet founder and energy analyst Sugandha Sachdeva said, as quoted by Reuters.The effect of the diplomatic push by Saudi Arabia, Turkey, and Pakistan was offset, however, by a CNN report saying that U.S. forces in the Middle East could launch an attack on Iran within 96 hours of President Trump giving an order to that effect. The U.S. president suggested at the end of last week he may decide to go for escalation instead of negotiation.Iran’s president, meanwhile, who hosted the high-ranking delegations from Saudi Arabia, Turkey, and Pakistan, called for unity among Islamic nations and acting as “a single force” against threats, according to an X post by the Iranian government. Such a unity may be a challenge given that most Gulf states are U.S. allies, which made them targets for Iranian attacks earlier in the year.All in all, the chances of a peace deal anytime soon remain quite remote, which earlier this week prompted the International Energy Agency to warn that the global energy supply disruption caused by the war would extend into next year.By Irina Slav for Oilprice.comMore Top Reads From Oilprice.comU.S. Partner in Venezuela Oil Deal Looks to Hike Crude ProductionU.S. Diesel at $6.30 a Gallon as First Russian Cargo Sets Sail for New YorkOil India Strikes Natural Gas in Shallow Offshore Basin