Oil retreated from six-month highs on Tehran peace talks as Saudi pipeline threats cap losses

Global crude oil futures settled lower on Monday as multi-nation diplomatic talks in Tehran and rising Russian diesel output tempered supply fears, though persistent attacks on Saudi infrastructure and Gulf shipping limited the pullback.

Crude benchmarks eased from near six-month peaks after Qatari mediators visited Tehran in coordination with Washington and envoys from Saudi Arabia, Turkey, and Pakistan held peace talks with Iranian officials. Brent fell 91 cents, or 0.8%, to settle at $115.81 a barrel after dropping over $2 intraday, while WTI shed $1.51, or 1.46%, to $101.76, stretching the transatlantic spread to $14.05.

Ongoing regional hostilities heavily cushioned the decline. Yemen's Houthis claimed weekend strikes on Saudi Arabia's East-West crude pipeline pumping stations and Riyadh airport, while Saudi air defences intercepted three drones on Monday and Egypt's parliament authorised military backing for Riyadh. Maritime risks also persisted as a vessel caught fire near Al-Faw, Iraq, and a strike-damaged tanker spill widened off the UAE.

Refined product relief weighed on prompt sentiment as Russian refiners raised October diesel runs following Moscow's US supply pact. However, structural deficits remained acute as US Strategic Petroleum Reserve stocks fell to a post-1982 low of 282.6 million barrels, Saudi Aramco unveiled plans to store crude in Singapore from late 2027, and International Energy Agency chief Fatih Birol warned markets will not return to pre-war norms in 2027.