Brent crude slipped below $114 on Tuesday as Tehran talks offset a Houthi attack near Saudi Arabia's Ras Tanura terminal. The analysis puts Brent in a $108 to $117 range, and says only a confirmed hit to Saudi export capacity breaks the ceiling.
Brent crude for December delivery traded at $113.88 a barrel at 11:10 a.m. ET on Tuesday, down 1.7% from Monday's settlement at $115.81. West Texas Intermediate fell 1.7% to $100.05.
Brent swung $2.35 intraday, driven by two competing Middle East headlines. The analysis calls that the signature of a market priced on risk premium rather than on barrels lost.
Ras Tanura fire reverses an early selloff
Saudi Arabia contained a fire near Aramco facilities at Ras Tanura, the kingdom's largest crude export terminal, in the early hours of Tuesday. The extent of the damage was not immediately clear. Yemen's Houthis claimed a ballistic missile attack on the refinery.
Brent then rose to $116.12, but the rally faded within hours as traders weighed the absence of any confirmed damage to export loading against a growing diplomatic push. A confirmed hit to the loading berths would remove a primary export outlet and justify a sustained move above $120, according to the analysis.
Tehran talks bring a promise to keep talking
Diplomacy pulled Brent back. On Monday, Saudi, Pakistani and Turkish officials met Iranian leaders in Tehran, and Iranian state media said the four countries agreed to continue talks on peace and security. Sources described the clearest result as a promise to keep talking rather than a concrete framework.
The market's read was cautious. Brent's decline was $1.93 from Monday's settlement because the talks produced no mechanism to stop Houthi attacks or reopen Gulf shipping to full capacity. A U.S.-Iran agreement could take $15 to $20 of risk premium out of Brent within weeks, while a U.S. decision to intensify operations would push it toward $120 to $125.
Physical tightness sets the floor
The NYMEX WTI curve sits in steep backwardation, with the December 2026 contract near $101.44 and prices declining to $50.26 by February 2037. Global inventories are down 500 million barrels since February, and that tightness sets a floor near $108 to $110.
Saudi authorities confirmed no new oil damage from the October 24 and 26 attack waves, and independent evidence shows no confirmed loss of Saudi production or exports from the latest attacks. On Wednesday, the weekly Energy Information Administration inventory report lands at 10:30 a.m. ET, followed by the Federal Reserve decision at 2:00 p.m. ET.
Source: Investing.com
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