Oil Prices Spike as Iran Offers to Reopen Hormuz

Brent crude oil prices surged above $102 per barrel on Tuesday before retreating to $99.45 following a diplomatic offer from Tehran. The initial price spike was driven by Houthi advances in Taiz, Yemen, and projectile strikes on tankers in the Strait of Hormuz. These risks were compounded by the Government of Saudi Arabia shutting down its East-West Pipeline as a precaution after attacks in Riyadh and Medina, forcing Saudi Aramco to increase exports through the Strait of Hormuz and utilize ship-to-ship transfers off Oman.

Donald Trump halted planned U.S. airstrikes against the Houthis on Sunday and expressed openness to meeting Iranian President Masoud Pezeshkian during the UN General Assembly in New York. In response, Iran offered to reopen the Strait of Hormuz within seven days if the United States takes initial steps to reduce military pressure. This potential diplomatic shift occurred as G7 foreign ministers condemned Houthi attacks on Saudi infrastructure and demanded that Iran stop arming the militant group.

While the U.S. and Iran signal a move toward negotiations, other regional tensions persist. British Prime Minister Andy Burnham announced limited air-to-air refueling support for Saudi aircraft, and France offered to help secure Saudi energy facilities in Yanbu. Separately, the National Oil Corporation reported a production drop of 200,000 barrels per day in Libya after an armed group closed a valve on the Sharara crude pipeline.