Brent slips as Iran president discusses mediation with Pakistan army chief  

[HOUSTON] Oil prices slipped after touching a five-month high on Tuesday (Oct 20) as traders weighed a meeting between the Iranian president and Pakistan’s army chief, a key US-Iran mediator, against continued Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.

Brent crude futures fell US$0.83, or 0.76 per cent, to US$108.72 at 12.31 pm EDT. Earlier in the session, the front-month contract reached US$111.99, a five-month high.

The November contract for US West Texas Intermediate crude, which expires on Tuesday, was down US$0.70, or 0.68 per cent, at US$102.96. That was down from the session high of US$110.48, the highest since April for a nearby contract. The more active December contract was down US$0.64, or 0.65 per cent, at US$97.90 a barrel.

Iran’s President Masoud Pezeshkian discussed mediation efforts and regional developments during a meeting with Pakistan’s army chief Field Marshal Asim Munir in Tehran, Iran’s Nournews reported on Tuesday.

Pakistan’s mediation efforts resulted in an interim peace agreement ​signed in ⁠June. But that deal quickly faltered amid new fighting between Iran and the US weeks later.

The talks in Teheran are against the backdrop of continued attacks by Yemen’s Iran-aligned Houthis, who said on Monday they launched several attacks on Saudi energy, airport and military targets, such as an Aramco site in Yanbu, the Shaybah oilfield, Riyadh’s King Khalid International Airport and Abha airport.

Saudi authorities did not immediately confirm the Houthi claims and Reuters could not independently verify them.

“Oil prices remain well-supported. ... This suggests the market is pricing in a significant risk premium, given the situation’s volatility,” ING analysts said in a note on Tuesday.

At least 18 vessels were reportedly attacked over two weeks, which keeps the risk premium intact, shiptracker Kpler said in a note on Monday.

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Also on Monday, a Houthi attack on a training camp for government security forces in Yemen’s Shabwa province killed 58 people and injured more than 200.

The renewed attacks heightened fears about regional stability and underscored continuing risks to energy supply from the region, keeping oil prices above US$100 a barrel.

Israeli Prime Minister Benjamin Netanyahu said in a statement he is “committed to completing the elimination of the Iranian regime”, and spoke with US President Donald Trump about it on Sunday.

Diesel supply

Russian diesel cargoes are returning to their traditional destinations after the US suspended sanctions and secured the lifting of an export ban, with at least two tankers signalling trips to Turkey and Brazil in recent days, according to shipping data from Kpler and LSEG.

The US is working with domestic refiners to squeeze more crude through its refining complex, US Energy Under Secretary Kyle Haustveit said on Tuesday at the Drake Forum in Titusville, Pennsylvania, a sentiment echoed by US Energy Secretary Chris Wright later on Tuesday in Houston.

The US is also pushing shuttered domestic refineries to reopen, Wright added.

In the US, analysts expected crude oil stockpiles to have fallen last week along with product inventories, a preliminary Reuters poll showed on Monday. REUTERS