Oil Prices Fall as Saudi Arabia Seeks Talks With Iran

Crude oil prices declined Monday, October 26, 2026, as Saudi Arabia sent Defense Minister Prince Khalid bin Salman to Tehran for talks with Iranian officials aimed at reducing regional tensions. Prices remained near six-month highs, however, as continued Houthi attacks on Saudi infrastructure and disruptions to commercial shipping sustained concerns about global energy supplies.

Brent crude futures fell $1.57, or 1.35%, to $115.15 a barrel by 1239 GMT, while U.S. West Texas Intermediate futures dropped $2.11, or 2.04%, to $101.16, according to Reuters. Earlier, CNBC reported Brent at $115.86 and WTI at $102.05, reflecting declines of 0.7% and 1.2%, respectively, at 9:19 a.m. ET.

The pullback followed a strong rally on Friday, when Brent settled nearly $3 higher and gained 6% for the week. WTI finished the week up 2.3%, leaving both benchmarks elevated despite Monday's declines.

According to Saudi Arabia's Foreign Ministry, Prince Khalid was scheduled to meet Iranian President Masoud Pezeshkian and National Security Council chief Mohsen Rezaei in Tehran. Pakistan's Army Chief of Staff Asim Munir and Turkish intelligence chief Ibrahim Kalin were also participating, as Pakistan and Turkey are members of a defense pact with Saudi Arabia.

Regional diplomatic efforts also included Qatari mediators, who traveled to Tehran on Sunday to pursue de-escalation in coordination with the United States, according to an official briefed on the situation cited by Reuters.

Despite the negotiations, Houthi militants said they had attacked Riyadh airport and pumping stations along Saudi Arabia's East-West crude oil pipeline over the weekend. Saudi authorities said Sunday that they had intercepted additional missiles and drones, while the kingdom partially resumed operations at its main airport despite damage from earlier strikes.

John Evans, an analyst at PVM Oil Associates, said the continuing attacks could limit the scope for a sustained decline in crude prices.

"With the jeopardy doubled by Houthi attacks into Saudi, any Brent price dips back to the lows of last week will find grateful buyers," said John Evans, an analyst at PVM Oil Associates.

Evans also indicated that the recent price correction had not yet undermined expectations of further gains among investors anticipating tighter supplies.

"Corrective processes are notoriously difficult to quantify, but this one has nowhere near reached any sort of levels where bulls might abandon hope," Evans said.

The conflict has disrupted commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait. According to the Washington Institute for Near East Policy, October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways since its maritime security tracking began in 2017.

Michael Alfaro, chief investment officer at Gallo Partners, estimated that geopolitical uncertainty had added approximately $20 a barrel to oil prices. He warned that a significant strike against Saudi Arabia's East-West pipeline or additional refining infrastructure could drive prices higher, although elevated costs could eventually reduce consumption.

Alfaro said Brent crude prices above $120 a barrel could trigger more demand destruction. He also identified refining capacity as a longer-term concern, warning that infrastructure damage could create structural challenges for energy markets extending into 2027 and beyond.

Saudi Arabia and Singapore have separately announced plans for state-owned Saudi Aramco to begin storing crude oil in Singapore during the second half of 2027. The countries' energy ministers said the arrangement was intended to strengthen the resilience of Saudi oil supplies to Asian markets.

International Energy Agency chief Fatih Birol reiterated concerns about the longer-term outlook, saying Monday at an industry event in Singapore that he did not expect energy markets in 2027 to return to their prewar conditions.

In the United States, the Energy Department authorized the release of up to 400,000 barrels from the Strategic Petroleum Reserve on Friday to address a supply disruption at a Louisiana refinery. Meanwhile, Alfaro said American producers were adding some drilling rigs but remained reluctant to commit substantial new capital to expanding production amid volatile prices and geopolitical uncertainty.

"We're not really seeing major capex additions to bring new rigs on or bring new production online," Alfaro said.