Oil climbed as fresh Saudi strikes and Yanbu storage countdown offset diplomatic optimism

Global crude oil futures settled roughly 1% higher on Monday, paring sharp intraday gains of nearly 5% as mounting supply disruptions across Saudi Arabian export corridors and regional chokepoints clashed with diplomatic signals from Washington.

International benchmark Brent crude rose $1.07, or 1.0%, to settle at $105.68 a barrel. US West Texas Intermediate (WTI) crude gained $1.34, or 1.3%, to finish at $101.39 a barrel.

Both contracts retreated from multi-month peaks late in the session after touching substantial intraday highs, pressured by diplomatic commentary and looming monetary policy tightening.

Upstream supply risks accelerated after Gulf Arab states postponed scheduled talks with Tehran following fresh Houthi drone and missile strikes targeting a military airbase in southern Saudi Arabia. Maritime bottlenecks tightened further as Houthi forces advanced across Perim Island at the mouth of the Red Sea, while commodity vessel transits through the Strait of Hormuz dropped to single digits over the weekend, falling well below the 10-day average of 14.

Physical supply concerns were compounded by the continuing shutdown of Saudi Arabia’s East-West Pipeline, which has idled an alternative export route representing up to 4% of global supply. With pipeline flows halted, the Red Sea port of Yanbu has begun drawing on local storage inventories, which industry estimates indicate can sustain export operations for only five to seven days.

However, stronger gains were checked after US President Donald Trump stated that Iran was seeking negotiations with Washington, alongside claims that Ukraine and Russia had agreed to halt attacks on energy infrastructure. Upward momentum was further capped by market expectations that the US Federal Reserve will deliver a 25-basis-point interest rate increase on Wednesday to counter energy-led inflationary pressures.

Written by: Aiman Haikal