Crude Oil Prices Decline from Six-Month Peaks; WTI at $101 per Barrel and Brent at $115
Oil prices fell over 1% on Monday after reaching near six-month highs late last week. Brent crude traded around $115 per barrel, while WTI crude dropped to $101.5 per barrel. The decline comes amid ongoing concerns about global oil supplies due to attacks on Saudi Arabia, which have kept market volatility high.
The US Federal Reserve’s upcoming policy decision is also influencing investor sentiment as crude enters a potentially turbulent week. WTI crude fell 1.71%, or $1.77, while Brent crude declined 1.41%, or $1.65. Last Friday, prices surged nearly $3 higher following Houthi attacks in Saudi Arabia, which raised fears about energy supply disruptions.
Security Concerns in the Middle East
Tensions in the Middle East remain a significant factor affecting oil prices. The Houthis claimed responsibility for attacks on a Saudi airport and oil facilities over the weekend. Saudi Arabia reported intercepting additional missiles and drones, and its main airport resumed partial operations after sustaining damage from earlier attacks. The militant group has vowed to continue targeting Saudi infrastructure.
Developments around the Strait of Hormuz are expected to further influence crude prices. Analysts warn that any disruption to energy facilities or shipping through the strait could push global prices towards $120 per barrel. Conversely, a credible move towards de-escalation could lead to a sharp correction in prices. Ajit Mishra, SVP – Research at Religare Broking, noted that traders should monitor geopolitical developments and Fed guidance for directional confirmation.
Supply Measures and Market Response
Efforts to alleviate supply concerns have not significantly impacted prices. The International Energy Agency has indicated readiness to release more strategic stocks, while the G7’s additional 100 million barrels largely involves accelerating an existing release program. The first Russian diesel cargo bound for the US has also failed to reverse the upward trend.
Market participants are looking for tangible evidence that these measures will lead to meaningful additional supplies. Navneet Damani, head of research – commodities at Motilal Oswal Financial Services Ltd, stated that elevated freight costs, constrained regional shipments, and persistent security threats continue to undermine export reliability. The risk premium remains elevated, with the balance of risks favoring the upside, although credible progress towards de-escalation could trigger profit-taking. The market will also keep an eye on weekly US inventory estimates from the American Petroleum Institute and the US Energy Information Administration for further direction.
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