Oil prices rose on Monday, snapping a four-session decline, as traders awaited US-Iranian talks that could potentially ease tensions in the Middle East. Brent crude futures for November delivery increased by $1.14, or 1.1%, to $101.48 per barrel. Meanwhile, West Texas Intermediate (WTI) crude futures for October delivery, which expire on Tuesday, rose by 87 cents, or 0.9%, to $96.65 per barrel. The more actively traded WTI futures for November delivery gained 85 cents, or 0.9%, to $93.22 per barrel.
The price increase comes as Iran and the US exchanged threats on Sunday, but US President Donald Trump expressed openness to meeting his Iranian counterpart, Masoud Pezeshkian, who is expected to attend UN meetings in New York this week. According to Tim Waterer, chief market analyst at KCM Trade, the rise in oil prices reflects a typical rebound from covering short positions after the recent decline, rather than a fundamental shift in market sentiment.
Waterer added that oil prices are likely to remain within a narrow range and be heavily influenced by news and political developments until there is clear progress or a setback in US-Iran diplomatic efforts. Tensions in the Middle East remain elevated, particularly after Yemen's Houthi rebels, backed by Iran, claimed attacks on Riyadh and a Saudi Aramco facility in Yanbu.
The Houthi rebels have escalated their efforts to block Saudi-backed forces from reaching the Red Sea coast. In response, Saudi Arabia has reportedly asked China to intervene and help limit Houthi attacks. Three Iranian sources revealed that China has urged Tehran to assist in reducing Houthi attacks in private talks.
In response to the attacks, Saudi Aramco has increased its oil exports through the Strait of Hormuz after a pipeline attack forced the company to halt some shipments via Yanbu. According to tanker tracking data, around 14 million barrels of Saudi crude oil were loaded onto seven supertankers in the Gulf on Sunday.
Analysts at Saxo Bank noted that supply concerns have started to ease, with shipments through the Strait of Hormuz reaching a six-month high and Saudi efforts to restore operations on the East-West pipeline. They also observed that implied volatility for crude oil has declined by 3.3% to 50.39, although it remains at historically high levels.
The ongoing tensions in the Middle East and the potential for diplomatic breakthroughs between the US and Iran will likely continue to influence oil prices in the near term. As the situation unfolds, traders will closely monitor developments that could impact the global oil supply and demand balance.
Key points
- Oil prices rose on Monday, with Brent crude increasing 1.1% to $101.48 per barrel and WTI crude gaining 0.9% to $96.65 per barrel.
- The price increase comes amid US-Iranian talks that could potentially ease tensions in the Middle East.
- Oil prices are likely to remain within a narrow range and be heavily influenced by news and political developments until there is clear progress or a setback in US-Iran diplomatic efforts.
