Symbolic imageBrent falls more than 6% as US-Iran talks advance and Aramco shuts Jizan refinery
Brent crude dropped more than 6 percent on Tuesday to about $83 a barrel as negotiations between Washington and Tehran gained traction, extending a retreat of roughly 16 percent from last week's peak above $100. At the same time Saudi Aramco suspended its 400,000 barrel-a-day Jizan refinery until mid-August after a Houthi attack, and the Red Sea route Riyadh uses to bypass the Strait of Hormuz remains under threat.
What happened
Brent fell 6.27 percent to $82.82 a barrel on Tuesday and WTI 5.42 percent to $78.13 as US-Iran negotiations gained traction, The National reported. Both benchmarks have given back about 16 percent from last Thursday's peak, when Brent topped $100 for the first time since late May after Houthi fighters struck Saudi tankers in the Red Sea. Saudi Aramco suspended operations at its Jizan refinery, which processes 400,000 barrels a day, on 27 July; Reuters, citing the consultancy IIR, reported damage to the gasification unit and the oil storage area and a restart expected by 15 August. The Houthis said on 25 July they had attacked Aramco facilities at Jizan and Yanbu with missiles and drones, after declaring a maritime embargo on Riyadh and blocking the Bab al-Mandeb. US and Iranian strikes stopped before the end of last week, and Trump said an agreement was possible while warning that American military action would resume if diplomacy failed.
The view from outside
The National in Abu Dhabi cites a Pakistani source close to the talks saying the US-Iran channel has widened to include the Houthi blockade of the Red Sea, and quotes Julius Baer's Norbert Rucker that the current spike should prove short-lived. Russia's TASS relayed the Aramco shutdown via Reuters without further comment. The Wall Street Journal reports China is still securing Middle East crude despite sanctions.
What could happen next
Riyadh loses 400,000 barrels a day of refining capacity until mid-August, just as attacks in the Strait of Hormuz have pushed it onto the Red Sea route the Houthis now threaten, the New York Times reports. Prices turned on Monday and fell further on Tuesday after a Brent rally of nearly 40 percent since the war reignited this month. The Financial Times frames the coming weeks as a test of whether Trump can talk prices down; both Washington and Tehran say strikes can resume, so the discount rests on the talks holding. The next markers are the widened negotiating agenda covering Bab al-Mandeb and the Jizan restart set for 15 August.
United States: Trump says talks with Tehran could produce an agreement but warns that military strikes will resume if diplomacy fails.
Iran: Tehran halted its strikes and keeps messaging channels open, having warned that attacks could restart if Washington continues its strikes.
Saudi Arabia: Riyadh has shut the attacked Jizan refinery until mid-August and depends on the Red Sea route to bypass the Strait of Hormuz.
Houthis: The Yemeni movement claims the strikes on Aramco sites at Jizan and Yanbu and enforces what it calls a maritime embargo on Riyadh.
Also involved