Oil Prices Fall as Diplomacy Gains Ground in Middle East Conflict

Oil prices have been declining in response to diplomatic efforts led by US President Donald Trump. After meetings with Chinese President Xi Jinping and other Arab leaders, oil began at $102 a barrel, fell to $97 mid-week, and settled at $92.5 by the end of the week.

The decline indicates that market expectations are shifting towards diplomatic easing rather than escalation in the Middle East conflict. European concerns have shifted from Russian retaliation for drone attacks on Moscow to Saudi Arabia's threats from the Houthis.

France is deploying troops, radar, and air defense systems to protect the Saudi port of Yanbu, while Britain has sent a refueling aircraft to support Saudi aircraft over Yemen. Trump met with officials from across the Middle East, including Turkish President Recep Tayyip Erdoğan, Syrian President Ahmed al-Sharaa, and Jordan's King Abdullah II.

The results of these meetings are unclear, but the continued decline in oil prices suggests that expectations of moderation outweigh fears of escalation for now. Iran's president and delegation arrived in New York for the UN General Assembly and held talks with an American delegation led by Steve Witkoff and Jared Kushner, with Qatar as mediator.

Turkey, Pakistan, and Saudi Arabia have signed a defense agreement known as the Mecca Joint Defense Agreement, which includes provisions treating attacks on one member as an attack on all three. Turkey's parliament speaker said this agreement could expand to include Iran and other Muslim countries, potentially opening a path towards resolving the conflict between Saudi Arabia and the Houthis.