Oil prices fell on Monday as hopes of peace talks between the United States and Iran eased fears of further military action in the Middle East. However, continued attacks on Saudi Arabia, a major oil producer, kept investors worried about possible disruptions to global oil supplies.
US and global oil prices declined in early trading. The possibility of renewed military action against Iran remains a concern for oil markets. However, she warned that the relief could be temporary. US President Donald Trump has not ruled out the possibility of further strikes on Iran. She added that oil price volatility is likely to remain high, with risks still pointing towards further price increases. Houthi attacks on Saudi Arabia continued despite diplomatic efforts to ease tensions. Monday’s fall in oil prices does not necessarily mean the global supply situation has improved. The International Energy Agency (IEA) has warned that energy markets may take years to recover from the war’s impact. Oil prices remain caught between hopes of peace and fears of further supply disruptions. Diplomatic efforts involving Qatar, Saudi Arabia, Turkey and Pakistan have helped ease immediate concerns about renewed fighting.
US West Texas Intermediate (WTI) crude futures fell by $1.76, or 1.7%, to $101.51 per barrel. Brent crude futures dropped by $1.49, or 1.28%, to $115.23 per barrel by 0744 GMT, according to Reuters. Hari said markets still expect that military strikes against Iran could take place after the US midterm elections scheduled for November 3. Saudi Aramco plans to store crude oil in Singapore from the second half of 2027. IEA chief Fatih Birol said at an industry event in Singapore on Monday that he did not expect energy markets in 2027 to return to the levels seen before the war in Iran.
The Houthis said they had attacked pumping stations on Saudi Arabia’s East-West crude oil pipeline and Riyadh airport over the weekend. Priyanka Sachdeva, head of market insight at Phillip Nova, said risks surrounding the Strait of Hormuz remained firmly in place. She said the price decline appeared to reflect traders adjusting their positions and managing risks rather than a meaningful improvement in the underlying oil supply situation. However, continued Houthi attacks, uncertainty over possible US military action and risks to key shipping routes are keeping the outlook for oil prices uncertain, according to Reuters.
Vandana Hari, founder of oil market analysis provider Vanda Insights, said fears of further military hostilities in the Middle East had eased on Monday morning after driving much of the previous week’s oil price rally. Saudi Arabia separately said on Sunday that it had intercepted more missiles and drones, Reuters reported. Saudi Arabia’s state-owned oil company will begin storing crude oil in Singapore as part of efforts to make its regional supply chain more resilient, the energy ministers of Saudi Arabia and Singapore said on Monday, according to Reuters.
