Oil Prices Fall as US-Iran Diplomacy Eases Supply Fears

Oil prices fell on Monday as intensifying diplomatic efforts between the United States and Iran eased immediate concerns over potential supply disruptions, offsetting risks arising from recent drone and missile strikes targeting Saudi Arabian oil infrastructure.

Brent crude futures for December delivery declined 1.5% to $114.97 a barrel, retreating after a rally of around 6% last week. US West Texas Intermediate (WTI) crude futures dropped 2.1% to $101.08 a barrel.

The decline came as diplomatic efforts to de-escalate tensions gathered momentum, with Qatari mediators arriving in Tehran alongside senior regional envoys to advance negotiations aimed at reducing the risk of a wider conflict.

However, concerns over global oil supplies remained elevated following recent attacks on Saudi Arabian energy infrastructure. Yemen's Houthi group claimed responsibility for drone strikes targeting pumping stations along Saudi Arabia's East-West oil pipeline, raising fears of further disruptions to crude shipments.

The pipeline is a strategically important route that allows Saudi Arabia to transport crude oil towards the Red Sea, potentially reducing its reliance on the Strait of Hormuz.

Market participants are closely monitoring diplomatic developments between Washington and Tehran, as well as security risks in the Middle East. While progress in negotiations could ease pressure on oil prices, any escalation in regional hostilities or further attacks on energy facilities could trigger renewed volatility in global crude markets.