Oil prices retreated on Monday as Saudi Arabia’s defense minister joined senior officials from Pakistan and Turkey in Tehran for talks intended to prevent the Middle East conflict from widening. The diplomatic effort reduced some immediate concern about further escalation, although attacks involving Saudi Arabia and Yemen continued to threaten energy infrastructure and transport routes.
Saudi Defense Minister Prince Khalid bin Salman met Iranian President Masoud Pezeshkian and senior security officials alongside Pakistan’s army chief, Field Marshal Asim Munir, and Turkey’s intelligence chief, Ibrahim Kalin. The four countries agreed to continue discussions on regional peace and security, but announced no detailed settlement or timetable for another meeting. Iranian security chief Mohsen Rezaei described the talks as very good, while Saudi Arabia said the delegation sought to reduce tensions, encourage dialogue and support mediation by Qatar and Pakistan.
The meeting came after Iran-aligned Houthi forces claimed attacks on Saudi targets, including pumping stations along the kingdom’s East-West Pipeline and Riyadh’s airport. Saudi-led forces said they had destroyed missile launchers, storage facilities and tunnels in Yemen, while Saudi officials did not immediately confirm the Houthi claims about the pipeline. The conflict has also raised concerns about shipping through the Strait of Hormuz and the effect of damage to oil production and refining facilities.
Michael Alfaro, chief investment officer of Gallo Partners, estimated that oil carried a risk premium of about $20 a barrel. He said a major strike on the East-West Pipeline or additional refining infrastructure could push prices sharply higher, while prices above $120 could damage demand. He identified refining capacity as the more durable vulnerability, warning that disruption could extend into 2027 and beyond.
Other measures highlighted the effort to improve supply resilience. Saudi Arabia and Singapore announced plans to store Saudi crude at the Jurong Rock Caverns on Jurong Island, with operations expected to begin in the second half of 2027.
The talks offered the market a diplomatic counterweight to the conflict’s supply risks, but they did not resolve the military or energy issues driving uncertainty. Further negotiations, the safety of regional shipping and the condition of Saudi infrastructure will remain central to the oil outlook.