Oil settled about 1% higher on Monday after new Houthi strikes on Saudi Arabia and a tanker explosion in the Strait of Hormuz stoked fears over Middle East supply. Brent closed at $105.68 a barrel and WTI at $101.39, both paring sharper intraday gains after President Trump said Iran wanted a deal with Washington.
Brent crude rose $1.07, or 1.0%, to settle at $105.68 a barrel, while WTI crude rose $1.34, or 1.3%, to settle at $101.39. Both benchmarks had jumped almost 5% intraday before retreating after Trump said Iran wanted to reach a deal with Washington.
Houthi Strikes Widen The Conflict
Yemen's Iran-backed Houthis launched a new attack on Saudi Arabia, firing dozens of missiles and drones at a military airbase in Khamis Mushait and targeting aircraft hangars, radar systems, runways and ammunition depots in retaliation for Saudi airstrikes in Yemen. Gulf Arab states postponed planned talks with Iran, underscoring fears the conflict could spread further.
The Houthis have advanced rapidly in Yemen in recent days, capturing Perim Island at the mouth of the Red Sea on Friday. A separate attack the same day, which Riyadh blamed on Iran-backed fighters in Iraq, knocked out Saudi Arabia's east-west pipeline, a route that threatens up to 4% of global oil supply. With the pipeline down, the Red Sea port of Yanbu must draw on storage that three industry sources estimate covers five to seven days of exports.
Hormuz Traffic Slows After Tanker Blast
Ship tracking data showed commodity vessel transits through the Strait of Hormuz fell to a single digit per day at the weekend, well below a 10-day average of 14. An oil tanker also exploded after reportedly colliding with mines in the strait, according to Iran's Fars News Agency, adding to the risks facing crude oil shipments through the chokepoint. Before the U.S. and Israel attacked Iran in late February, about a fifth of the world's oil supplies passed through the Strait of Hormuz.
Russia-Ukraine Truce And A Fed Decision Loom
Trump also said Ukraine and Russia had agreed not to hit each other's energy targets, after Ukrainian strikes on Russian energy infrastructure last week pushed U.S. diesel prices to record highs. Any deal ending the war could let Russia export more energy, since the OPEC+ member was the world's third-biggest crude producer in 2025 behind the U.S. and Saudi Arabia.
Oil above $100 a barrel is also feeding interest rate expectations. Investors bet the Federal Reserve will lift its benchmark rate a quarter point, to a 3.75%-4.00% range, on Wednesday and signal further tightening, with elevated inflation and Fed Chair Kevin Warsh's focus on price stability supporting the case.
Sources: Commodities & Futures News, Crypto Briefing
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