Oil Retreats as Traders Weigh U.S.-Iran Diplomacy Against Saudi Attack Risks

Oil prices fell Monday, pulling back from near six-month highs as traders weighed diplomatic efforts to ease U.S.-Iran hostilities against renewed Houthi attacks on Saudi Arabia and persistent Middle East supply risks. December Brent crude futures fell 1.5% to $114.97 a barrel, while December West Texas Intermediate dropped 2.1% to $101.08 a barrel. The decline followed a sharp rally last week, when Brent gained more than 6% and settled Friday at $116.72, its highest close in nearly six months. U.S. crude ended Friday at $103.27. The Saudi-led coalition said Monday it intercepted a ballistic missile launched toward Riyadh by Yemen's Iran-backed Houthi militia and struck Houthi missile launchers and storage sites in retaliation. Middle Eastern mediators are seeking to revive Washington-Tehran negotiations, The Wall Street Journal reported. Shipments through the Strait of Hormuz have recovered, averaging 12.65 million barrels a day over seven days, about 26% below the prewar baseline of 17.15 million, according to Kpler data. Goldman Sachs estimates geopolitical uncertainty accounts for roughly $27 a barrel of Brent's price, with underlying fair value near $85 a barrel.