West Texas Intermediate (WTI) US Oil prices increased by 1.00% on Monday, trading around $91.90, driven by escalating geopolitical tensions in the Middle East despite the potential for an energy ceasefire between Russia and Ukraine that could alleviate supply concerns [1]. The price rebound follows attacks by Iran-backed Houthi militants on Saudi Arabia, including two strikes on Riyadh's King Khalid International Airport, with the first attack reportedly resulting in 12 deaths and over 300 injuries [1].
US President Donald Trump warned that the United States could join Saudi Arabia in retaliatory strikes against the Houthis in Yemen and also issued a warning to Iran, raising fears of a broader regional escalation that could threaten energy infrastructure and oil shipments [1]. Maritime security risks remain high after a drone attack on an oil tanker near the Sohar anchorage off Oman, close to the strategic Strait of Hormuz, with the UK Maritime Trade Operations (UKMTO) confirming the incident as an attack, highlighting vulnerabilities in Persian Gulf shipping routes [1].
On the Russia-Ukraine front, President Trump announced that both countries had agreed to halt attacks on each other's energy infrastructure after discussions with Russian President Vladimir Putin. Ukrainian President Volodymyr Zelenskyy initially stated he was unaware of any formal agreement but later expressed Ukraine's readiness to sign ceasefire guarantees, calling on Washington to ensure Russia respects the proposed deal [1]. Trump also announced an agreement for Russia to supply diesel to the United States, starting with more than 300,000 tons immediately and additional deliveries in the coming months, which could ease market concerns over global fuel availability [1].
On the demand side, OPEC significantly lowered its forecast for global oil demand growth in 2024, now expecting an increase of just 400,000 barrels per day (bpd), down from an initial projection of 1.4 million bpd at the start of the year, according to Secretary General Haitham Al Ghais. OPEC anticipates that some deferred demand will materialize in 2027, potentially supporting oil consumption next year [1]. The US Department of Energy has also approved an emergency exchange of up to 4 million barrels of crude oil from strategic reserves to mitigate supply disruptions [1].
CONCLUSION
WTI oil prices have rebounded sharply due to heightened Middle East tensions and supply disruption fears, despite the potential for a Russia-Ukraine energy ceasefire and increased Russian diesel supplies to the US. OPEC's downward revision of demand growth and US emergency crude releases add further complexity to the market outlook. Overall, the market remains highly sensitive to geopolitical developments and supply-demand shifts.