Oil prices fell Tuesday as traders assessed recovering Middle East crude exports against fresh shipping incidents around the Strait of Hormuz and renewed fighting near the Bab al-Mandeb Strait.

December Brent crude futures fell 2.6% to $97.73 a barrel, while December West Texas Intermediate futures dropped 1.8% to $86.64 a barrel.

In a fresh sign of recovering Saudi Arabian export capacity, the country's East-West pipeline carried 5.8 million barrels a day as of Tuesday after being shut following drone attacks in mid-September, Energy Minister Prince Abdulaziz bin Salman said. The kingdom began using the pipeline again within five or six days of the attacks, he said at the Made in GCC 2026 Forum and Exhibition in Bahrain. The roughly 750-mile route to the Red Sea port of Yanbu has capacity of about 7 million barrels a day.

Middle Eastern crude flows are improving, with regional exports exceeding prewar levels on several days in late September as producers used alternative routes and logistical adjustments to keep barrels moving, Priyanka Sachdeva at Phillip Nova said. Still, renewed tanker attacks around the Strait of Hormuz are keeping shipping, insurance, routing and security risks elevated, she said.

Higher Middle East exports, lower Chinese imports and rising supply from producers outside the Organization of the Petroleum Exporting Countries and its allies point toward potentially oversupplied crude markets, Commonwealth Bank of Australia's Vivek Dhar said. However, traders appear reluctant to fully price in that outlook because the recent increase in Middle East exports may not be sustainable, he added.

Recovering crude flows should ease some supply-driven pressure on oil prices, but the wider energy market remains tight because refined-product supplies are still constrained and freight costs remain elevated, analysts at MUFG said. Middle East diesel and gasoline exports remain well below prewar levels amid limited refinery capacity, they said.

That uneven recovery is also keeping a geopolitical premium in the market. Growing signs of improving Persian Gulf oil flows have eased immediate supply concerns, but traders remain wary of further regional disruptions, ING commodities strategists Warren Patterson and Ewa Manthey said. That uncertainty is likely to persist until there are signs of progress toward an agreement between the U.S. and Iran, they said.

The recovery has remained uneven across the oil market. The seven-day average for crude shipments through the Strait of Hormuz reached 10.3 million barrels a day as of Saturday, or 76% of prewar levels, according to Kpler data cited by The Wall Street Journal. Refined products such as diesel and gasoline accounted for 11% of overall flows through the strait, down from more than 20% before the conflict, as damage to Middle Eastern refineries continued to constrain fuel supplies.

Shipping risks remain elevated. U.K. Maritime Trade Operations said a tanker entering the Strait of Hormuz on Monday was hailed by Iran's Islamic Revolutionary Guard Corps about 11 nautical miles north of Khasab, Oman, and instructed to turn back or risk being targeted. The vessel complied.

Later Monday, another tanker in the strait was struck by an unknown projectile, causing a fire in its engine room, UKMTO said. No casualties or environmental impact were reported at the time.

Tensions have also increased around the Red Sea. Yemen's state-run Saba news agency said Tuesday that government forces had retaken the strategic Red Sea port city of Mokha from Houthi fighters after heavy fighting. The Wall Street Journal had earlier reported that Saudi and Yemeni forces were pressing a counteroffensive aimed at retaking the city and reducing threats to energy exports through the Bab al-Mandab Strait.

Separately, Saudi-led coalition naval forces carried out an operation in Yemen's Hodeidah province that destroyed weapons depots, storage facilities for explosive-laden boats and naval mines, according to the Saudi Press Agency. The coalition said the operation thwarted planned attacks on waterways in the southern Red Sea and was intended to protect navigation through Bab al-Mandeb.