Crude oil prices bounced back on Monday morning after rising. Traders booked profits as new diplomatic talks began to ease tensions between the United States, Israel and Iran. While news of the mediation calmed immediate concerns about dwindling global crude supplies, fresh Houthi attacks against Saudi targets reminded everyone that the threat has not gone away.
Brent crude futures, which serve as the world benchmark, were down 1.8% at $114.65 a barrel around mid-morning (14:42 GMT) in New York. In the United States, West Texas Intermediate (WTI) crude saw an even sharper decline, falling 2.1% to trade at $101.06 a barrel.
How Friday's spike set up a pullback
Both oil benchmarks gained about $3 on Friday. The surge came just after Iran-aligned Houthi fighters launched attacks in Yemen, raising serious concerns about security at Saudi energy plants. Saudi Arabia remains one of the largest oil exporters on the planet, so any threat to its infrastructure immediately causes market panic.
Clashes continue over key areas between Yemen's Saudi-backed government forces and Houthi fighters. The fighting involves land right next to the Bab el-Mandeb Strait, a narrow sea passage through which large quantities of Gulf oil passes every day.
By the time the market closed on Friday, Brent had closed at $ 116.72 per barrel. This was its highest closing mark since April 29, marking an impressive weekly gain of nearly 6%. WTI ended Friday at $103.27 a barrel, up 2.3% for the week.
Weekend attacks and sudden diplomatic moves
Over the weekend, the conflict remained heated. The Houthis claimed they attacked a Saudi airport and several oil facilities on Saturday. Saudi defense forces said on Sunday that they managed to intercept and shoot down several incoming drones and missiles.
Even with those attacks, diplomacy showed signs of life. Qatari mediators traveled to Tehran on Sunday to help ease tensions between Iran and the White House, reports have confirmed. Also, top officials from Saudi Arabia, Türkiye and Pakistan planned to sit with Iranian leaders in Tehran on Monday for regional security discussions.
What are the leaders and market analysts saying?
Former US President Donald Trump addressed the standoff during an interview with Fox News on Sunday. He said it was soon becoming "decision time" about whether Washington should lock down a deal with Tehran or "terminate" it, leaving the door open to renewed conflict.
Iran's foreign minister responded with his own warning, saying that as long as common sense prevails, the US will not try another attack.
Despite the slight decline in crude oil prices, market watchers remain cautious. In a note to clients, analysts at Yardeni Research noted that the conflict in the Middle East remains an unpredictable factor for global markets, stressing that the risk of things turning into outright military conflict is very high.
Key Takeaways for Crude Oil Traders and Energy Markets
- Short Term Relief:Talk of peace and diplomatic visits to Tehran gave buyers reason to pause, pushing prices down from multi-month highs.
- High Risk Floor:Drone attacks on Saudi infrastructure and shipping routes near the Bab al-Mandeb Strait mean oil could rise sharply on any headline.
- Price Levels to Watch:Brent remains near $114 after touching $116, while WTI is trading just above the psychological support mark of $100.