Oil Surges Above $107 as Qatar Pushes New US-Iran Talks

Global oil prices climbed above $107 a barrel on Tuesday as markets reacted to renewed diplomatic efforts to end the US-Iran conflict, with Qatar working to bring the two sides back to negotiations over the future of the strategically vital Strait of Hormuz.

Brent crude futures rose to around $107 a barrel, while US West Texas Intermediate was trading near $94. The move followed another jump on Monday, when Brent gained more than 3% after US President Donald Trump rejected Iran's latest proposal for reopening the waterway. Prices later eased as traders took some comfort from reports that Qatari mediators were preparing another round of discussions.

The latest diplomatic effort centres on an amended version of a seven-day proposal put forward by Iran at the United Nations General Assembly. Tehran has linked the reopening of the Strait of Hormuz to measures including an end to the US blockade of Iranian ports, sanctions relief and the release of frozen Iranian funds. In return, Iran has indicated it would resume negotiations over its nuclear programme.

Trump rejected Iran's initial proposal as unacceptable but has also indicated that further discussions could take place. Separate talks involving US and Iranian representatives and mediators are now being pursued, with Qatar playing a central role in carrying messages between the two sides. Iranian Foreign Minister Abbas Araghchi has also met Qatari mediators in New York as Tehran waits for a response from Washington.

For oil traders, however, diplomacy has so far offered little immediate relief. The Strait of Hormuz remains severely disrupted, leaving uncertainty over how quickly large volumes of crude and petroleum products can move through the waterway. The International Energy Agency estimates that roughly 20 million barrels a day of oil and oil products normally passed through the strait in 2025, equivalent to about a quarter of global seaborne oil trade.

There are signs that some supply routes are beginning to recover. Reuters reported that Middle Eastern crude exports reached about 16.3 million barrels per day in September, the highest level since the conflict began, supported by increased shipments from Saudi Arabia and the United Arab Emirates. But the figure remains about 3.2 million barrels per day below February's pre-conflict level, while flows through Hormuz remain constrained.

Saudi Arabia has also restarted crude loadings at Yanbu following the reopening of its East-West Pipeline, providing an alternative route that bypasses Hormuz. Reuters reported that loadings from Yanbu have resumed at roughly 2 million barrels per day, although pipeline throughput remains below its pre-attack capacity and a full recovery could take weeks.

The partial recovery has not been enough to eliminate concerns about the physical availability of oil. Much of the additional Middle Eastern supply still depends on alternative and more expensive shipping arrangements, while the continuing disruption around Hormuz leaves buyers exposed to further delays or escalation. Reuters reported that Middle Eastern crude exports were still below pre-conflict levels despite the September rebound.

The market is also watching the diplomatic signals closely because a credible agreement could rapidly change the supply outlook. A durable reopening of Hormuz would remove a major risk premium from crude prices, while a breakdown in negotiations could intensify fears of prolonged disruption. Qatar's involvement is therefore significant not simply as a diplomatic development, but because the country itself depends heavily on the same waterway for energy exports, including liquefied natural gas. Reuters reported that Qatar-linked LNG traffic through Hormuz has recently begun to increase, although the route remains affected by the conflict.

For consumers and economies around the world, the stakes extend beyond the price displayed on an oil-market screen. Prolonged high crude prices can feed into petrol, diesel, aviation fuel, shipping and production costs, adding to inflationary pressure at a time when central banks are already watching energy markets closely. The IEA has previously warned that disruptions around Hormuz can have consequences far beyond the Gulf because the waterway is one of the world's most important energy chokepoints.

The immediate direction of oil prices will therefore depend increasingly on whether diplomacy can translate into actual ships moving safely through Hormuz. Qatar's renewed mediation has opened another channel for dialogue, but until the waterway is reliably reopened and regional oil flows return closer to normal, traders are likely to keep pricing the possibility of another supply shock into crude. The latest move above $107 is a reminder that in today's energy market, the distance between a diplomatic breakthrough and another oil-price surge can be measured in days, and sometimes hours.