Oil Eases Below $114 as Traders Weigh Iran Diplomacy Against Houthi Escalation
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Brent crude fell below $114 a barrel Thursday as traders weighed fresh diplomatic moves aimed at preventing a resumption of US military strikes on Iran, after the benchmark had climbed more than one percent in the previous session. West Texas Intermediate traded near $101.
The turn followed reports that Vice President JD Vance reached out to Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, the Wall Street Journal reported. Iranian Foreign Minister Abbas Araghchi said Tehran “continued to give diplomacy a chance.” Qatar presented Iran with a proposal to end the war, which Tehran called “unacceptable,” while other mediators held a separate proposal to avoid a return to fighting for review by Iran’s Supreme Leader.
The diplomatic signs cut against a week of escalation in the Gulf and the Red Sea. On Wednesday, Brent gained 1.83 percent to $111.41 and WTI 1.69 percent to $101.59 after Yemen’s Houthi rebels called for the evacuation of Aden airport, where residents reported explosions before the notice. The Iran-backed group said the evacuation call followed the arrival of a Saudi military cargo plane, and it has struck the airport repeatedly during its clashes with Yemen’s internationally recognized government.
The Houthis’ campaign against Saudi Arabia has drawn outside powers closer in. Egypt’s parliament authorized the military to send aid to Riyadh, with President Abdel Fattah al-Sisi limiting Cairo’s role to defensive support. Turkey said it would seek parliamentary approval to send personnel under a newly signed defense pact with Riyadh and Islamabad. Britain is sending fighter jets for defensive operations, including refueling support for strikes on Houthi targets. Pakistan has sent about 8,000 troops and air force fighters; the troops are expected to defend Saudi oil infrastructure rather than engage in fighting.
Riyadh is acting on its own accounts. Reuters reported the kingdom appears to be expanding a ballistic-missile factory, and plans to store crude at Singapore’s Jurong Rock Caverns in 2027 to protect supply against attack.
The market now prices a contested proposition: a channel between Washington and Tehran that has produced contact but no agreement, against an active shooting front that keeps a premium in every barrel. Traders will watch whether the Vance-Rezaei contact develops into talks with the Supreme Leader’s sign-off.