Oil prices end lower in volatile session amid reports of U.S.-Iran diplomacy

Crude oil futures fell Tuesday, pausing the significant two-week rally as traders weighed a reported meeting between Iran's president and Pakistan's army ‌chief against continued Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Persian Gulf.

An earlier unconfirmed report on war negotiations had knocked crude oil futures off five-month highs, with Brent falling as much as 3.3% before paring losses.

Iran's President Pezeshkian discussed mediation efforts ⁠and regional developments at a meeting in Tehran with Pakistan's army chief Field Marshal Asim Munir, who has been a key U.S.-Iran mediator, Iran media reported on Tuesday.

Separately, U.S. special envoy Steve Witkoff reportedly will offer Russia's President Putin direct talks with President Trump and President Zelenskyy in an effort to secure a ceasefire in Ukraine.

There was "no smoking-gun headline" prompting the move lower in oil, but "this is the kind of volatility you get when geopolitical events pile up on top of each other," Mizuho commodity specialist Robert Yawger said in a note. "I don't see anybody putting forward a peace deal. I don't see any bearish geopolitical events."

A U.S.-Iran agreement before the U.S. midterm elections in two weeks appears increasingly unlikely, Deutsche Bank analyst said, adding that investors are concerned that the Trump administration could escalate tensions with Iran after the elections.

Russian diesel cargoes are returning to their traditional destinations after the U.S. suspended sanctions and lifted an export ban, with at least two tankers signaling trips to Turkey and Brazil ​in recent days, according to shipping data from Kpler and LSEG.

The U.S. is working with domestic refiners to ​produce more fuels and finding ways to reopen shuttered refineries, U.S. Energy Secretary Chris Wright and other DoE officials said Tuesday.

Front-month Nymex crude (CL1:COM) for November delivery fell 1.8% to $101.79/bbl, snapping an eight-session winning streak, and front-month Brent crude (CO1:COM) for December delivery slipped 0.7% to $108.79/bbl.

U.S. natural gas futures (NG1:COM) fell on mild temperature forecasts that are now stretching into next month, with the front-month Nymex contract for November delivery dropping 3.1% to $2.9630/MMBtu.

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