Oil Nears 4-Month High as Gulf-Iran Hormuz Talks Collapse

Brent crude surged toward $108 per barrel after Gulf states postponed talks with Iran on the Strait of Hormuz and Houthi strikes hit Saudi Arabia.

A meeting scheduled for Monday in Oman between Iran and Gulf Arab states on the future of the Strait of Hormuz was postponed, with Oman's Foreign Minister Sayyid Badr Albusaidi saying the delay came "in the interests of consensus." Iran said the postponement was made jointly with Muscat at the request of some regional countries, and Iran's foreign ministry blamed Saudi objection specifically, according to Al Jazeera. The talks were meant to present an Iran-Oman agreement on temporary shipping corridors through the strait, which has been largely closed since the U.S. and Israel attacked Iran at the end of February.

The postponement is a setback after genuine optimism: Iran, Oman and mediating Pakistan had voiced confidence roughly two weeks ago that the two states bordering the strait were poised to announce a new mechanism for commercial traffic, Reuters reported via The Business Standard. According to Al Jazeera, U.S. media reported that Saudi Arabia submitted amendments to the Iran-Oman proposal, fearing its wording would lock in a new status quo unacceptable to Riyadh, while Bahrain refused to attend at all, calling participation "appeasement." Rather than a breakthrough, the region's most consequential diplomatic track stalled entirely.

Oil prices jumped as markets reopened, with Brent crude rising to about $107.94 per barrel — up 3.2% and its highest level in almost four months — and U.S. crude at over $103.26, roughly 20% higher than a month ago. The price stood near $72 before the war began in late February, CBS News reported. At the same time, the Houthis said they fired dozens of missiles and drones at a military airbase in Khamis Mushait in southern Saudi Arabia, and Saudi authorities issued emergency alerts in four cities, Reuters reported.

The Houthi advance in Yemen has seized the country's Red Sea coast and Perim Island, cementing control of the Bab el-Mandeb Strait — the southern gateway the Saudis had counted on as an alternative to Hormuz. Compounding that, a drone attack blamed on Iranian-backed militias in Iraq knocked out Saudi Arabia's 745-mile East-West Pipeline, its main bypass route, which can carry up to 7 million barrels a day. According to Reuters, buyers say Saudi stockpiles at Yanbu could cover exports for only five to seven days, after which as much as 4% of global oil supply could be jeopardized.

The war's spread to Yemen poses a dilemma for President Trump, who faces pressure to aid Saudi allies while avoiding a costly new front, Reuters reported via gCaptain. According to Reuters, Crown Prince Mohammed bin Salman asked Trump for military aid against the Houthis but was offered only intelligence support so far, and bin Salman met U.S. Central Command chief Admiral Brad Cooper in Jeddah on Monday. Meanwhile, U.S. Energy Secretary Chris Wright said the weekly average of oil shipments crossing Hormuz under Navy escort was rising, while Trump said on Truth Social the U.S. was open to engaging with Iran on a deal.

Iran says it will continue pursuing its bilateral agreement with Oman on Hormuz regardless, with foreign ministry spokesman Esmaeil Baghaei saying Tehran and Muscat will decide how to announce or register the deal, Al Jazeera reported. Iran's foreign minister has said the strait will not reopen until Washington meets Tehran's demands, per The Business Standard. Officials told the Associated Press, as cited by CBS News, that repairing the Saudi pipeline could take three to five weeks. Trump, for his part, predicted the war would end shortly after November's midterm elections, after which oil prices would "drop like a rock."