Key Moments
- US WTI crude fell $1.76 to $101.51 per barrel and Brent slipped $1.49 to $115.23 after last week’s sharp rally.
- Prices had jumped on Houthi attacks in Saudi Arabia, with Brent up 6% and WTI up 2.3% over the previous week.
- Market participants remain focused on ongoing security risks, shipping disruptions, and expectations of elevated volatility despite mediation efforts.
Oil Pulls Back After Last Week’s Surge
Oil prices declined on Monday following a strong advance last week that took benchmarks close to six-month highs, as investors weighed signs of possible easing in tensions between the United States and Iran against continuing security threats in Saudi Arabia.
By 0744 GMT, US West Texas Intermediate (WTI) crude futures were lower by $1.76, or 1.7%, at $101.51 per barrel. Brent crude futures were down $1.49, or 1.28%, at $115.23.
The retreat came after a robust session on Friday, when Houthi attacks in Saudi Arabia intensified supply concerns and lifted prices by nearly $3 at the close. Over the course of the previous week, Brent advanced 6% while WTI gained 2.3%.
| Contract | Price | Move | Percentage Change | Time (GMT) |
|---|---|---|---|---|
| WTI crude futures | $101.51 | – $1.76 | – 1.7% | 0744 |
| Brent crude futures | $115.23 | – $1.49 | – 1.28% | 0744 |
Diplomatic Overtures Ease Immediate Tension
Market sentiment was influenced by diplomatic activity aimed at de-escalating regional frictions. An official briefed on the developments said Qatari mediators traveled to Tehran on Sunday to support efforts, undertaken in coordination with the United States, to reduce tensions.
In a further sign of engagement, senior representatives from Mecca Pact members Saudi Arabia, Turkey and Pakistan were scheduled to hold talks with Iranian leaders in Tehran on Monday. This meeting marks the first high-level engagement between these parties since attacks by Iran-backed Houthis on Saudi Arabia emerged as a focal point in the broader conflict.
“Concerns over renewed military hostilities in the Middle East, which drove much of last week’s crude rally, have eased this morning, but the reprieve may prove temporary,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Hari noted that US President Donald Trump has not dispelled expectations in the market that potential strikes on Iran could still occur after the November 3 midterm elections. “We therefore expect volatility to remain elevated, with risks still skewed to the upside,” she added.
Attacks in Saudi Arabia and Shipping Disruptions Persist
Despite the mediation efforts, security incidents continued over the weekend. The Houthis stated that they had targeted pumping stations on Saudi Arabia’s East-West crude pipeline as well as Riyadh airport. Saudi authorities said on Sunday that additional missiles and drones had been intercepted.
The ongoing US-Israeli war on Iran that began on February 28 continued to affect global energy flows, as companies adapted operations to disruptions in commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait.
Aramco Storage Move and Supply Risk Assessments
On Monday, energy ministers from Saudi Arabia and Singapore announced that state-owned Saudi Aramco plans to begin storing crude oil in Singapore from the second half of 2027. The move is intended to strengthen the resilience of Aramco’s regional supply chain.
“While supply risks surrounding the Strait of Hormuz remain firmly entrenched, the current pullback appears more reflective of position adjustments and risk management rather than any meaningful improvement in the underlying supply situation,” said Priyanka Sachdeva, head of market insight at Phillip Nova.
Concerns over structural tightness were echoed by the head of the International Energy Agency, Fatih Birol. Speaking at an industry event in Singapore on Monday, he said he does not expect energy markets in 2027 to return to where they were before the Iran war.
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