Oil prices declined on Tuesday as investors weighed diplomatic efforts to ease tensions in the Middle East against continued Houthi attacks on Saudi Arabia and concerns about a potential escalation in the U.S.-Israeli conflict with Iran. Brent crude futures settled down $1.93, or 1.8%, at $113.88 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $1.86, or 1.83%, to $99.90 a barrel. Despite the decline, both benchmarks remained near their highest levels in six months as geopolitical risks continued to support prices.

Diplomatic discussions between Iran, Saudi Arabia, Turkey and Pakistan continued as regional officials sought to strengthen cooperation and prevent further escalation. However, hopes for a breakthrough were challenged by renewed attacks from Yemen’s Iran-aligned Houthis, who claimed responsibility for a ballistic missile strike targeting Saudi Arabia’s Ras Tanura oil refinery, the largest in the kingdom. Continued attacks on commercial shipping in the Strait of Hormuz also sustained concerns about potential disruptions to global oil supplies. Meanwhile, UBS raised its year-end Brent price forecast from $100 to $110 a barrel, citing ongoing supply uncertainty and geopolitical risks.

Additional uncertainty came from expectations that Russian crude exports from Baltic and Black Sea ports will decline next month as domestic refineries increase production following scheduled maintenance and expand diesel output to meet demand under the recent U.S.-Russia supply agreement. Investors were also awaiting upcoming U.S. inventory reports for further indications of whether refined product supplies are beginning to improve. Analysts cautioned that even if crude prices decline, elevated refining and transportation costs, along with continued diesel demand and geopolitical risks, could delay any meaningful relief in fuel prices for consumers.