Oil prices edged lower after three days of gains driven by concern that the widening war in the Middle East could hamper a recovery in supply from the region. Brent traded below $106 a barrel after rising more than 6% over the previous three sessions, while West Texas Intermediate was near $93. Diesel fell for a third day in New York after Russia agreed to release more supply following a request by US President Donald Trump.
A barrage of drone and missile attacks by Iran-backed Houthi militants on Saudi Arabia's main airport has intensified pressure on Washington to step up its efforts in the conflict in Yemen. Houthi attacks on Riyadh's main airport over the weekend killed at least 16 people, including a US citizen, and wounded about 300. Trump has said he would consider joining Saudi-backed strikes against the Yemen-based group. Meanwhile, Trump said there had been violations of his "energy ceasefire" between Kyiv and Moscow, and President Volodymyr Zelenskyy said Ukraine will continue attacks against Russia.
Oil has risen more than 70% this year as the US war on Iran roils energy markets. Strikes on tankers in the Strait of Hormuz have escalated, prompting a growing number of supertankers to turn away from the Persian Gulf. Saudi Aramco could add 1.2 million barrels a day of export capacity within seven to eight weeks by repurposing existing gas pipelines, Energy Minister Prince Abdulaziz bin Salman said. The kingdom also plans to expand a pipeline that bypasses Hormuz by 40% to 10 million barrels a day within two to three years.
Middle East oil flows have recovered sharply in recent weeks, with some Wall Street banks saying crude shipments had returned to near pre-war levels. That recovery has put downward pressure on prices but left the market vulnerable to another major disruption, according to Haris Khurshid, chief investment officer at Karobaar Capital LP. In Europe, Trump's envoys Jared Kushner and Steve Witkoff told Ukrainian officials that allowing Russian diesel exports was part of efforts to bring Moscow back to negotiations, Reuters reported.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing