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. 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.
Oil prices rose last week
Oil prices had climbed sharply last week because of fears over supply disruptions. On Friday, prices settled nearly $3 higher after Houthi attacks in Saudi Arabia raised concerns about the movement and availability of oil.
Brent crude recorded a stronger weekly gain than US oil prices. Brent crude rose 6% over the week, while WTI crude ended the week 2.3% higher.
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US-Iran peace talks ease oil market fears
Qatar stepped up efforts to reduce tensions between the US and Iran. Qatari mediators travelled to Tehran on Sunday as part of diplomatic efforts to ease regional tensions, working in coordination with the United States, an official briefed on the situation told Reuters.
Saudi Arabia, Turkey and Pakistan also planned high-level talks with Iran. Senior officials from the three countries, which are part of the Mecca Pact, were scheduled to meet Iranian leaders in Tehran on Monday. Reuters reported that this would be their first high-level contact since attacks by Iran-backed Houthi forces on Saudi Arabia became a major point of concern in the wider conflict.
Oil prices face risks from possible US strikes on Iran
The possibility of renewed military action against Iran remains a concern for oil markets. 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. However, she warned that the relief could be temporary.
US President Donald Trump has not ruled out the possibility of further strikes on Iran. Hari said markets still expect that military strikes against Iran could take place after the US midterm elections scheduled for November 3. She added that oil price volatility is likely to remain high, with risks still pointing towards further price increases.
Houthi attacks on Saudi Arabia raise oil supply concerns
Houthi attacks on Saudi Arabia continued despite diplomatic efforts to ease tensions. The Houthis said they had attacked pumping stations on Saudi Arabia’s East-West crude oil pipeline and Riyadh airport over the weekend. Saudi Arabia separately said on Sunday that it had intercepted more missiles and drones, Reuters reported.
The attacks have raised concerns about Saudi Arabia’s oil transportation infrastructure. The East-West pipeline is an important route for moving Saudi crude oil. Any disruption to its operations could create further uncertainty about the availability and movement of oil supplies, particularly while regional tensions remain high.
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Strait of Hormuz disruptions threaten global oil supplies
The US-Israeli war against Iran continues to disrupt global shipping. The conflict began on February 28, and its effects are still being felt as companies adjust to interruptions in commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait, Reuters reported.
The Strait of Hormuz remains a major concern for global oil supplies. The waterway is an important route for transporting oil from the Gulf to international markets. Continued risks to shipping through the strait are keeping concerns about oil availability high, even as prices fall in Monday’s trading.
Saudi Aramco to store crude oil in Singapore
Saudi Aramco plans to store crude oil in Singapore from the second half of 2027. 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.
The planned storage facility is aimed at strengthening the company’s ability to manage supply disruptions. By keeping crude oil in Singapore, Saudi Aramco plans to improve the resilience of its supply chain in the region as uncertainty over energy transportation continues.
Monday’s fall in oil prices does not necessarily mean the global supply situation has improved. 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.
The International Energy Agency (IEA) has warned that energy markets may take years to recover from the war’s impact. 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.
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. 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.
