WTI retreats to near $100 as Middle East talks temper supply concerns

• Regional security discussions in Tehran were agreed by Iran, Saudi Arabia, Pakistan and Turkey as part of efforts to promote stability.
• With US midterm elections approaching, Middle East talks take place against the prospect of military strikes on Iran if negotiations fail to progress.
• Although crude flows have returned to pre-war levels, continuing conflicts involving the Houthis and Hezbollah leave supply risks elevated.

At around $100.10 per barrel in Tuesday’s Asian session, West Texas Intermediate (WTI) oil is extending its decline for a second consecutive day. Renewed diplomacy in the Middle East has weighed on crude prices by fuelling hopes that a broader escalation of the US-Iran conflict can be averted.

Iran, Saudi Arabia, Pakistan and Turkey committed on Monday to further security talks and closer regional cooperation following high-level discussions in Tehran, Islamic Republic of Iran Broadcasting (IRIB) reported. The first meeting between Iran and senior representatives of the Mecca Joint Defence Agreement concluded with a joint statement. It said the four countries had agreed to sustain dialogue and consultations, with particular emphasis on regional peace, security and stability.

The US midterm elections are roughly a week away as these discussions take place. US President Donald Trump has repeatedly suggested that military strikes against Iran could resume after the elections, following months of stalled negotiations.

Despite crude flows returning to around pre-war levels, persistent tensions still threaten Middle Eastern oil supplies. Saudi-led forces remain engaged with Iran-backed Houthi rebels, while Hezbollah is reportedly preparing for another regional conflict in Lebanon after receiving Iranian financial support.

WTI crude retains constructive CTA positioning, TD Securities says

Trend-following accounts continue to hold a positive stance towards WTI crude, according to TD Securities, whose CTA Position Tracker identifies "constructive positioning" in the contract. With net long exposure concentrated around recent price levels and "upside triggers" nearby, the bank suggests systematic traders are positioned to increase their long holdings if the prevailing trend continues. Its WTI crude scenario analysis also points to CTAs being ready to "add or trim exposure as volatility and trend signals evolve through the coming months," reflecting a flexible, rules-based approach to managing risk across energy markets.