Oil rises as US-Iran diplomatic hopes collide with supply fears at UN

Oil prices climbed on Tuesday as investors weighed the prospect of a diplomatic encounter between President Donald Trump and Iranian President Masoud Pezeshkian at the United Nations General Assembly in New York, with Brent crude rising above $101 a barrel after settling at $100.34 on Monday.tradingeconomics+1

Diplomatic Uncertainty Lifts Crude

The gains reversed part of Monday's 3.4% decline in Brent crude, which had fallen on hopes that this week's UN gathering could produce a breakthrough in the US-Iran conflict. Trump said Sunday he was open to meeting Pezeshkian on the sidelines of the assembly, but no formal meeting has been scheduled, and Iranian media reported that Tehran had not issued a direct response. Pezeshkian's name does not appear on Trump's packed Tuesday agenda, which already includes bilateral meetings with at least 11 world leaders.reuters+2

The CNN Warner Bros. Discovery, Inc. ↗ 0.03% reported that the Trump administration confirmed it would allow Iran's "core delegation," including Pezeshkian, to travel to New York for the assembly. But investors remain skeptical that talks will materialize quickly enough to ease supply concerns that have pushed Brent roughly 50% above pre-war levels.iea+1

Houthi Attacks and Supply Risks

Tensions in the region were underscored by a Houthi ballistic missile attack on the Saudi capital Riyadh last Saturday — the first targeting of the city since the escalation in fighting with Iran-backed rebels. The Houthis also claimed strikes on a Saudi Aramco facility in the Red Sea city of Yanbu. Saudi-led coalition forces said they intercepted the Riyadh missile, and no casualties were reported.npr+4

The attacks have kept a risk premium embedded in crude prices. According to Reuters, the Houthis have captured wide swathes of Yemen, attacked Saudi Arabia, and threatened shipping through the Bab el-Mandab strait, a chokepoint for global trade.reuters

Market Outlook

Trump is set to deliver a speech to the General Assembly on Tuesday before his slate of meetings, which includes talks with Gulf state leaders from the UAE, Saudi Arabia, Oman, Bahrain, Kuwait, and Qatar. Those discussions are expected to focus on the Houthi threat and regional security. An International Energy Agency report earlier this month noted Brent futures were trading around $105 a barrel at the time of writing, with physical benchmarks even higher. Analysts have forecast Brent to trade in a $90–$110 range through the rest of the year, leaving oil markets highly sensitive to any diplomatic signals emerging from this week's meetings in New York.cnbcafrica+2