Brent crude oil prices fell 2.9% to $104.52 a barrel on Friday as signs of renewed diplomacy around the Strait of Hormuz lifted hopes for a partial de-escalation in the region.
Foreign ministers from the Gulf Cooperation Council, which includes Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, and Oman, are set to meet Iran's foreign minister on Monday, according to sources cited by the Financial Times. It would be the first such gathering since the U.S. and Israel launched their war on Tehran.
The talks come as Oman and Iran try to build support for a deal that would temporarily manage traffic in the Strait of Hormuz. But the arrangement would not fully reopen the waterway. Tehran has said the U.S. must first fulfill terms of an earlier ceasefire deal reached in June.
For now, the U.S. and Iran remain locked in a stalemate over a global energy chokepoint. The U.S. naval blockade is stopping Iran from exporting oil through its ports, while Iranian drone and missile attacks are preventing other exporters from getting back to prewar levels.
The U.S. military has been helping non-Iranian oil move through the Strait of Hormuz, bringing exports from the region to around two-thirds of prewar levels. That still leaves a significant shortfall, but it has weakened Iran's ability to use the strait as political leverage.
At the same time, Iran has escalated elsewhere. It recently launched fresh missile salvos at U.S. bases in the region, attacked U.S. warships, and helped its Houthi allies in Yemen seize territory near the Bab al-Mandab Strait, which connects the Red Sea and the Arabian Sea.
That matters for Saudi Arabia. After Iran closed the Strait of Hormuz, the Bab al-Mandab Strait became a vital bypass for Saudi oil shipments, which were diverted from the Gulf to the Red Sea through the East-West Pipeline. But the Houthis reportedly attacked the pipeline and Saudi tankers in recent days too.
Saudi Crown Prince Mohammed bin Salman called President Donald Trump twice on Thursday and asked for U.S. strikes against the Houthis, but was turned down, sources told Axios. U.S. officials said the Trump administration will instead provide intelligence and targeting data. U.S. forces will stay focused on Iran and the Strait of Hormuz.
Saudi Arabia also has a defense pact with Pakistan, which has deployed troops near the Saudi border with Yemen. But Pakistan depends on energy shipments that transit through the Strait of Hormuz and the Red Sea, making Islamabad reluctant to antagonize Iran. Pakistan's foreign ministry said no military response to the Houthi attacks is being discussed.
Capital markets noticed the difference between rhetoric and risk. One chokepoint may be easing, but another is still under pressure, and the taxpayers and consumers who ultimately pay for instability never get a vote when governments trade threats across the water.
The market has already voted on what it sees: diplomacy can cool prices fast, but supply lines remain fragile when state power is the main instrument. For free enterprise, the lesson is plain. Energy depends on secure routes, not slogans, and every disruption carries a cost that shows up in margins long before politicians admit it.
