Oil Prices Retreat as Geopolitical Tensions in the Middle East Ease
Oil prices declined in global trading on Monday, retreating from the $100 per barrel level as signs of easing geopolitical tensions in the Middle East weighed on the market. Brent crude fell 6% to $90.93 per barrel, while U.S. crude dropped 6.1% to $83.83 per barrel.
Brent crude futures briefly fell below $90 per barrel in early Monday trading before settling 6% lower at $90.93 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures declined 6.1% to $83.83 per barrel.
Brent crude had briefly climbed above $100 per barrel last week following the announcement of a naval blockade of Saudi Arabia by the Yemeni Armed Forces. However, prices retreated after Washington halted its attacks on Iran following 13 consecutive nights of aerial operations.
Investors were also encouraged by reports on Friday indicating that China is seeking to revive stalled peace talks between Washington and Tehran, raising hopes for a return to negotiations after weeks of escalating military tensions.
Analysts at ING Bank said the sharp decline in prices during Monday’s trading reflected the market’s eagerness to price in any signs of de-escalation after nearly two weeks of conflict.
Despite the easing tensions, traders remained cautious due to ongoing shipping disruptions in the Strait of Hormuz and the Bab el-Mandeb Strait.
According to Investing, ANZ Bank said the market has so far absorbed the disruptions through reduced crude oil imports into China and the release of emergency reserves. However, the bank warned that these pressures are increasingly mounting as strategic reserves decline, commercial inventories rise, and risks to shipping through the Strait of Hormuz and Bab el-Mandeb persist. As a result, oil prices remain vulnerable to renewed gains should supply disruptions across the region intensify.