Oil Prices Surge to Near Four-Month High as Iran-Oman Strait Talks Stall

Global oil prices climbed toward four-month highs on Monday as diplomatic efforts to ease tensions over the Strait of Hormuz stalled and fighting intensified in Yemen. Brent crude, the international benchmark, rose 3.2% to $107.94 per barrel, while U.S. crude advanced to $103.26 per barrel, marking a more than 20% increase from a month ago.

Oman announced that a scheduled meeting with Iran and other regional officials in Muscat would be postponed “in the interests of consensus.” The talks, intended to discuss future management of the Strait of Hormuz shipping lanes, were called off after several Gulf Cooperation Council countries raised objections. According to a Gulf official familiar with the matter, Saudi Arabia submitted amendments to the proposed agreement, citing concerns that the deal could negatively impact other regional nations.

The delay comes despite earlier optimism from Iran, Oman, and mediator Pakistan regarding a new mechanism for controlling commercial traffic through the vital waterway. Both Iranian and Omani officials confirmed the postponement, attributing it to requests from certain regional partners.

Compounding energy market concerns, combat operations in Yemen escalated significantly over the weekend. Houthi rebels, backed by Iran, seized additional territory near the Red Sea coast, including the port city of Mokha and an island controlling the Bab el-Mandeb Strait. This strategic advancement threatens to further restrict Saudi Arabia’s oil exports via alternative shipping routes, as the Strait of Hormuz remains heavily disrupted by the ongoing conflict between the U.S. and Iran.

Yemen’s government, supported by Saudi forces, vowed to reinforce its troops in the coastal region following what one official described as a painful defeat. In response to the Houthi advances, Saudi military targets have come under fire from rebel positions.

Amid the rising instability, Iranian President Massoud Pezeshkian stated on Sunday that Tehran and the United Arab Emirates wish to “turn the page” on the war. During a meeting with Abu Dhabi’s crown prince at the BRICS summit in India, Pezeshkian claimed both sides agreed to look toward the future and rebuild relations. Tensions between the two neighbors have severely deteriorated since the war began in late February, leading the UAE to suspend trade and financial exchanges with Iran in August.