(Oct 27) : Oil fell for a second day as stepped-up diplomatic efforts bolstered hopes a broader escalation in the US-Iran war may be averted.

West Texas Intermediate dropped toward US$101 a barrel after losing 1.5% in the previous session, while Brent settled below US$116. Senior officials from Saudi Arabia, Pakistan and Turkey traveled to Tehran for discussions on Monday, with participants agreeing to continue talks, according to the IRIB news agency.

Elsewhere on Tuesday, Russian President Vladimir Putin will meet with Iranian President Masoud Pezeshkian, as well as Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, on the sidelines of an energy summit in Moscow.

Still, risks remain elevated across the region. The Saudi-led coalition said it destroyed three drones in Riyadh. In Lebanon, Hezbollah is preparing for a new regional war after receiving funds from Iran, Reuters said, citing security personnel. That followed clashes involving Yemen-based Houthi rebels.

Global crude benchmark Brent has surged by almost 90% this year, as the US-Iran war disrupted energy flows and drew Yemen’s Houthi rebels into the conflict, with repeated attacks on Saudi Arabia. Investors are bracing for a packed stretch of potential market catalysts, with Israeli elections on Tuesday, a Federal Reserve decision later this week, and the US midterms on Nov. 3.

In the Israeli contest, Prime Minister Benjamin Netanyahu is pledging to topple Tehran’s regime, with US President Donald Trump’s backing. His challenger, opposition leader Gadi Eisenkot, says Iran’s nuclear program must be stopped, but he’s added that regime change is “not an achievable goal.”

The Fed will deliver its policy decision on Wednesday, after tightening last month for the first time since 2023 to tackle still-too-hot inflation. In the run-up, Fed officials suggested they were in no hurry to raise interest rates again, despite gains in energy costs.

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