Oil prices pare losses as Hormuz, Houthi tensions persist

Oil prices fell on Monday as U.S. President Donald Trump played down the likelihood of further military strikes against Iran, easing immediate concerns over another escalation in the conflict.

However, continued attacks on commercial shipping through the Strait of Hormuz and renewed Houthi strikes on Saudi infrastructure kept supply concerns elevated.

As of 03:18 ET (08:18 GMT), January Brent oil futures fell 1.8% to $96.55 a barrel, while U.S. West Texas Intermediate (WTI) crude futures declined 1.2% to $89.78 a barrel. Brent had plunged around 16% last week, marking its steepest weekly decline since the onset of the Covid-19 pandemic.

Trump told CNN over the weekend that it was highly unlikely he would order further attacks on Iran, provided negotiations continued to make progress towards a strong agreement. His comments helped ease immediate fears of renewed military escalation and encouraged some bargain buying after last week’s sharp decline.

The Democratic Party’s strong performance in the U.S. midterm elections has also fuelled expectations of increased congressional pressure on Trump to bring the conflict to an end. Trump acknowledged that the Iran war had contributed to Republican losses, while Vice President JD Vance also linked the election setback to the conflict.

However, diplomatic progress remains uncertain. Trump is scheduled to meet Qatar’s prime minister on Monday to discuss mediation efforts, but Secretary of State Marco Rubio said negotiations had made little headway and that an agreement was not imminent.

Iranian Foreign Minister Abbas Araghchi said mediators had stopped travelling between the parties following the U.S. election results, adding that it would take time for diplomatic efforts to resume.

Meanwhile, Washington has expanded its pressure campaign through Task Force Iron Gate, aimed at restricting Iran’s access to advanced weapons, sanctioned materials and other prohibited goods through land borders and Caspian Sea trade routes.

Iranian media reported that no vessels transited the Strait of Hormuz on Sunday after Tehran said navigational aid systems in the southern part of the waterway had been destroyed, restricting traffic through routes it considers unauthorised.

Shipping risks were underscored by separate incidents reported by the United Kingdom Maritime Trade Operations agency on Sunday. 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 has separately claimed that several tankers and a tugboat caught fire after encountering mines in the waterway, although maritime authorities have not independently verified those claims.

Iran-backed Houthi militants also claimed an attempted attack on Saudi Arabia’s Aramco office in Riyadh. Saudi authorities said falling debris damaged windows across several floors of the building, although no casualties were reported. Civil defence officials said the danger had passed after issuing an alert on Monday.

Some alternative export arrangements are emerging. Iraq’s foreign minister said Baghdad had reached an understanding with Washington to move Iraqi crude through Hormuz using a designated shipping lane near Oman. Iraq’s exports recovered to about 3.5 million barrels per day in October from 2.65 million bpd in September, although the foreign minister estimated that the war and export disruptions had cost the country around $60