International oil prices fell on Monday, giving up earlier gains as investors weighed renewed hopes for diplomatic engagement between the United States and Iran against fresh concerns over global energy security following the Houthis’ announcement of a naval blockade on Saudi Arabia.

As Reuters reports, prices initially climbed to their highest levels in a month before profit-taking set in as markets reassessed the evolving situation in the Middle East.

Brent crude was down 19 cents, or about 0.2%, at $87.93 a barrel, after earlier reaching $91.42, its highest level since June 11.

U.S. West Texas Intermediate (WTI) crude fell 38 cents, or 0.5%, to $82.12 a barrel, after previously climbing to $85.39, its highest level since June 12.

The initial rally was driven by concerns over potential disruptions to oil shipments through the Strait of Hormuz, as tensions in the Middle East continue to escalate.

Hopes for renewed U.S.-Iran negotiations

At the same time, a senior Iranian official told Reuters that mediators had delivered a proposal to Tehran aimed at de-escalating the conflict with the United States.

The proposal reportedly calls for a 10-day ceasefire, designed to create enough time to restart negotiations and revive the temporary agreement reached last month.

The prospect of a diplomatic breakthrough helped limit further gains in oil prices despite the ongoing military operations.

Houthis open a new front

Uncertainty increased after Iran-backed Houthi rebels in Yemen announced they were imposing a naval blockade on Saudi Arabia.

The move is seen as opening a new front in the conflict and raising risks to global energy supplies and international trade by extending the crisis beyond the Persian Gulf.

Dennis Kissler, Senior Vice President of Trading at BOK Financial, said markets would closely watch whether the Houthis’ threats translate into an actual disruption of oil exports through the Red Sea, warning that such a development could quickly tighten global supply.

Traffic through the Strait of Hormuz declines

The collapse of the U.S.-Iran ceasefire has once again raised concerns over oil shipments through the Strait of Hormuz, which handled roughly 20% of global oil supply before the conflict.

According to LSEG data, only four vessels transited the Strait on Sunday, down from eight during the previous 24-hour period, highlighting growing caution among shipping companies.

Meanwhile, Greek shipping company Dynacom Tankers said that two tankers under its management were struck by projectiles of unknown origin while sailing off the coast of Oman.

At the same time, Iran’s Revolutionary Guards claimed that two oil tankers suffered explosions and became disabled while attempting to use what they described as an “unsafe southern route” through the Strait of Hormuz. It remains unclear whether the incidents are connected or involve the vessels managed by Dynacom.

Oil transportation slows

Analysts at ANZ said market sentiment has become increasingly pessimistic, as the expected recovery in shipping activity has effectively stalled, with daily transits through the Strait of Hormuz falling into single digits.

Satellite data and market sources also indicate that ship-to-ship oil transfers in waters outside the Strait of Hormuz have slowed following a wave of attacks attributed to Iranian forces, adding to concerns over the smooth functioning of the global oil market.