Oil prices pared their losses amid ongoing tensions in the Strait of Hormuz and escalating Houthi military activity, while US President Donald Trump’s remarks downplaying the likelihood of further military strikes against Iran helped ease immediate concerns about a renewed escalation of the conflict.
January Brent crude futures declined, alongside US West Texas Intermediate crude futures, after Brent had plunged approximately 16% in the previous week, marking its largest weekly decline since the beginning of the COVID 19 pandemic.
Trump told CNN that ordering additional attacks on Iran would be highly unlikely, provided negotiations made progress toward a strong agreement. His comments helped ease immediate fears of renewed military escalation, encouraging bargain buying following the recent sharp decline in crude prices.
The Democratic Party’s strong performance in the US midterm elections also reinforced expectations of increased congressional pressure on Trump to restore stability and bring the conflict to an end. Trump acknowledged that the war with Iran had contributed to Republican electoral losses, while Vice President JD Vance also linked the election defeat to the ongoing conflict.
Nevertheless, diplomatic progress remains uncertain. While Trump is expected to meet with the Qatari Prime Minister to discuss mediation efforts, Secretary of State Marco Rubio indicated that negotiations had made little progress and that an agreement was not imminent.
Iranian Foreign Minister Abbas Araghchi stated that mediators had stopped moving between the parties, adding that restarting diplomatic efforts would take time. Meanwhile, Washington expanded its pressure campaign through Task Force Iron Gate, aiming to restrict Iran’s access to advanced weapons and prohibited materials through land borders and trade routes across the Caspian Sea.
Iranian media reported that no vessels had crossed the Strait of Hormuz following Tehran’s announcement that navigation systems in the southern part of the waterway had been destroyed, disrupting traffic through routes it considers unauthorized.
Shipping risks were further highlighted by separate incidents reported by the United Kingdom Maritime Trade Operations. An outbound tanker was struck by an unidentified projectile in the strait, while another tanker caught fire northwest of Khasab, Oman, forcing its crew to evacuate. Iran also claimed that several tankers and a tugboat had caught fire after encountering naval mines, although maritime authorities had not independently confirmed these claims.
In a related development, the Houthis announced an attempted attack on Saudi Aramco’s headquarters in Riyadh. Saudi authorities reported that falling debris damaged the building’s windows without causing any injuries, while civil defense teams confirmed that the immediate danger had passed.
Meanwhile, alternative export arrangements have begun to emerge. Iraq’s Foreign Minister stated that Baghdad had reached a mutual understanding with Washington to transport Iraqi crude through the Strait of Hormuz using a designated maritime corridor near Oman. Iraqi oil exports have recovered to approximately 3.5 million barrels per day, although the minister estimated that the war and export disruptions had cost the country nearly $60 billion.
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