Oil Retreats from Near Six-Month Highs as Qatar Mediates US-Iran Tensions

Oil prices pulled back on Monday after surging to near six-month highs the previous week. Brent crude futures dropped $2.21, or 1.89%, to $114.51 per barrel, while US West Texas Intermediate fell $2.23, or 2.16%, to $101.04. The two benchmarks had gained roughly 6% and 2.3% respectively last week, driven largely by Houthi attacks on Saudi Arabian infrastructure.

On Sunday, Qatari mediators flew to Tehran as part of a US-coordinated effort to reduce regional tensions. Despite the diplomatic activity, Iran-backed Houthi forces struck a Saudi airport and oil facilities on Saturday, and Saudi Arabia reported intercepting additional missiles and drones on Sunday.

Vandana Hari, founder of oil market analysis firm Vanda Insights, cautioned that concerns easing on Monday might not last, noting that President Trump has not ruled out strikes on Iran following the November 3 midterm elections. "We therefore expect volatility to remain elevated, with risks still skewed to the upside," she said.

The US-Israeli war on Iran, which began on February 28, has disrupted commercial shipping through the Strait of Hormuz and Bab el-Mandeb Strait. Priyanka Sachdeva of Phillip Nova described the price pullback as reflecting "position adjustments and risk management rather than any meaningful improvement in the underlying supply situation."

IEA chief Fatih Birol, speaking at an industry event in Singapore on Monday, said he does not expect energy markets in 2027 to return to pre-war levels. Separately, Saudi Arabia and Singapore announced that Saudi Aramco will begin storing crude oil in Singapore from the second half of 2027 to strengthen its regional supply chain.