JPMorgan estimates Brent crude is worth about $94 per barrel based on market fundamentals, while the geopolitical premium in oil has reached roughly $21 per barrel as the Iran conflict keeps shipping costs and supply risks elevated. Those risks were on full display Tuesday as Brent traded near $115 to $116 and West Texas Intermediate sat near $101 to $102.
Oil prices swung throughout the session after senior officials from Iran, Saudi Arabia, Pakistan and Turkey agreed to keep talking following a meeting in Tehran. At the same time, Houthi forces claimed attacks on Saudi Arabia's East-West crude pipeline pumping stations and Riyadh airport. Saudi Arabia had not immediately confirmed those claims, though its coalition said it intercepted a ballistic missile launched toward Riyadh and destroyed four missile launchers and five storage tunnels in Yemen.
Early Tuesday, benchmark Brent crude futures rose 0.5% to $116.38 per barrel and U.S. WTI gained 0.6% to $102.35, according to Investing.com. Later, December Brent futures fell 0.8% to $114.93 and December WTI dropped 0.9% to $100.90, according to the Wall Street Journal. Last week, Brent touched six-month highs on fears of further attacks on energy sites and commercial shipping.
Diplomatic efforts continued. Saudi Arabia's Foreign Ministry said a visit by Defense Minister Prince Khalid bin Salman aimed to reduce tensions and support mediation by Qatar and Pakistan. The talks covered Houthi attacks on Saudi Arabia, possible U.S.-Iran discussions, shipping disruptions in the Strait of Hormuz and the U.S. blockade of Iranian ports. Oman said its discussions with Iran produced an outline for a temporary arrangement to restore free navigation through the Strait of Hormuz, though Omani Foreign Minister Badr Albusaidi said it would require compromises from both Washington and Tehran. U.S. President Donald Trump has left open the chance of more military action against Iran, while Tehran has said talks with Washington would require an end to the blockade and the lifting of sanctions on Iranian oil exports.
International Energy Agency Executive Director Fatih Birol said energy markets are unlikely to return to pre-war conditions in 2027. Capital Economics noted the U.S. naval blockade, now in place for more than 100 days, is hurting Iran's economy, with the rial falling and inflation near 90% a year. Saudi Aramco also plans to start storing crude oil in Singapore in the second half of 2027.
