Riyadh’s Tehran Gambit: Negotiating With Iran While the Drones Are Still Flying

(SeaPRwire) –  

Oil markets woke up Tuesday unsure whether to price a ceasefire or another escalation. Brent crude hovered near $115 to $116 a barrel. WTI stayed just above $101. Early trading showed gains: Brent up 0.5% to $116.38, WTI up 0.6% to $102.35. Then late contracts flipped. December Brent fell 0.8% to $114.93. December WTI dropped 0.9% to $100.90. That split was not technical noise. It was political confusion. Riyadh keeps saying it wants talks with Tehran. Riyadh says it while Houthi drones hit its own territory. That contradiction is the actual market signal. Last week Brent touched six-month highs on the fear that energy sites and shipping lanes would keep getting attacked. Tuesday’s price swing shows traders no longer know which direction the fear runs.

Now lay down the raw facts. Senior officials from Saudi Arabia, Turkey and Pakistan sat with Iranian leaders in Tehran on Monday. The joint statement said the four countries agreed to continue talks on regional peace and security. Prince Khalid bin Salman, the crown prince’s younger brother, made the trip. At the same moment, Houthi forces claimed attacks on pumping stations on Saudi Arabia’s East-West crude pipeline and on Riyadh airport. Saudi authorities had not confirmed those claims, but they did report intercepting missiles and drones in recent days. The Saudi-led coalition said it intercepted a ballistic missile fired at Riyadh. It also said it destroyed four ballistic missile launchers and five tunnels used to store missiles in Yemen. That is the environment for the new diplomacy. Saudi Arabia’s Foreign Ministry described the visit as an effort to reduce tensions and support Qatari and Pakistani mediation. It wants open negotiation channels. Fine. But the military campaign has not paused to make room for the talks.

Oman added a separate track. Its foreign minister, Badr Albusaidi, said talks with Iran produced an outline for a temporary arrangement to restore free navigation in the Strait of Hormuz. It would require compromises from Washington and Tehran. Washington, at least rhetorically, has not moved. President Trump has left open more military action against Iran. Tehran’s precondition is clear: talks with Washington require an end to the U.S. naval blockade and the lifting of sanctions on Iranian oil exports. That precondition is the core impasse. The blockade has been running for more than 100 days. Capital Economics says it has hammered Iran’s economy, with the rial falling and inflation close to 90% a year. Iran feels the squeeze. Yet it still refuses to talk under the current terms. Riyadh, meanwhile, is getting hit by a militia Iran can influence without owning. That gives Tehran leverage it does not have to defend.

The strategic result is a fragmented risk regime. The IEA’s Fatih Birol said energy markets are unlikely to return to pre-war conditions in 2027. That is not an optimistic forecast; it is a structural warning. Saudi Aramco is already preparing crude oil storage in Singapore starting in the second half of 2027. That is a logistics hedge, not a supply expansion. The old settlement of Gulf security is failing. Saudi Arabia no longer assumes the United States will keep the oil routes safe. A defense minister from Riyadh does not fly to Tehran while drones hit his own country unless the previous protection guarantee has already broken down. The oil market will keep swinging until the region builds a new balance. The hard part is that nobody has offered terms both Tehran and Riyadh can sell at home.