Brent falls as Iran's president discusses mediation with CDF Munir

Brent crude futures settle down at $108.79 after reaching a five-month high of $111.99 earlier in the session

Oil prices settled down ​after touching a five-month high on Tuesday as traders weighed a meeting between the Iranian President Masoud Pezeshkian and Chief of Defence Forces (CDF) and Chief of Army Staff Field Marshal Asim Munir, a key US-Iran mediator, against continued Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.

Brent crude futures settled down 76 cents, or 0.69%, at $108.79. Earlier in the session, the front-month contract reached $111.99, a five-month high.

The November contract for US West Texas Intermediate crude, which expired on Tuesday, settled ​down $1.87, or 1.8%, at $101.79. That was down from the session high of $110.48, the highest since April for a nearby contract. ​The more active December contract settled down 72 cents at $97.82 a barrel.

Iran's President Pezeshkian discussed mediation efforts ⁠and regional developments during a meeting with Field Marshal Munir in Tehran, Iran's Nournews reported on Tuesday.

Read: CDF Munir meets senior Iranian officials as Pakistan continues diplomatic push to end conflict

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 Tehran 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.

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.

Read More: Death toll from Houthi attack on Yemen training camp rises to 73

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

US crude oil stockpiles ⁠were expected ​to have fallen last week along with product inventories, an extended Reuters poll showed ​on Tuesday. Eight analysts polled by Reuters estimated, on average, that crude inventories fell by about 800,000 barrels in the week ended October 16.