Oil edges lower after rising on expanding Middle East conflict
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Oil has risen more than 70% in 2026 as the US war on Iran roils energy markets.
PHOTO: BLOOMBERG
- Oil prices slipped after three days of gains, as traders weighed fears that the widening Middle East war could disrupt supply and lift energy costs further.
- Houthi drone and missile attacks on Saudi Arabia killed at least 16 people and wounded about 300, while Trump said he may back Saudi-led strikes and warned of violations of his “energy ceasefire”.
- Saudi Arabia is moving to reduce its reliance on the Strait of Hormuz, with Aramco planning extra export capacity soon and a bigger bypass pipeline within two to three years, showing how fragile oil flows remain.
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Oil edged lower following three days of gains that were driven by concern the widening war in the Middle East could hamper a recovery in supply from the region.
Brent traded below US$106 a barrel after rising more than 6% over the previous three sessions, while West Texas Intermediate was near US$93.
Diesel fell 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.
Meanwhile, Trump said there had been violations of his “energy ceasefire” between Kyiv and Moscow.
President Volodymyr Zelensky said Ukraine will continue attacks against Russia as his nation’s energy infrastructure is still being targeted.
Oil has risen more than 70% in 2026 as the US war on Iran roils energy markets.
The attacks on Saudi Arabia came shortly after Riyadh-led forces in Yemen launched a campaign to retake Houthi-held territory, while strikes on tankers in the critical Strait of Hormuz have escalated.
That has led to a growing number of supertankers turning away from the Persian Gulf in recent days.
“It’s been a dizzying few days of headlines,” said Scott Shelton, an energy specialist at TP ICAP Group, pointing to issues including Trump’s claims of an “energy ceasefire” as well as the Houthi attacks on Saudi Arabia. “We are off to a messy start this week.”
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 that is backed by Iran.
Meanwhile, the kingdom is seeking to bolster its ability to ship oil without having to transit the Strait of Hormuz.
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 at a conference in Riyadh on Monday.
The country also plans to expand a pipeline that bypasses Hormuz by 40% to 10 million barrels a day within two to three years.
The push comes even after Middle East oil flows recovered sharply in recent weeks.
Some Wall Street banks have said crude shipments from the region had returned to near pre-war levels.
That recovery put downward pressure on prices, but has also left the market vulnerable to another major supply disruption, said Haris Khurshid, chief investment officer at Karobaar Capital LP.
“Just because the system has found ways to keep oil moving doesn’t mean it can handle another major disruption. That’s the risk the market could be underestimating.”
In Europe, Trump’s envoys Jared Kushner and Steve Witkoff told Ukrainian officials on Oct 9 that allowing Russian diesel exports was part of efforts to bring Moscow back to negotiations to end the war, Reuters reported, citing sources familiar with the matter. BLOOMBERG