SerpApi.Org
Oil prices settled at one-month highs in volatile trading on Monday as traders weighed escalating geopolitical tensions following a fresh barrage of strikes across the Middle East over the weekend against reports of a new ceasefire proposal between the U.S. and Iran.
Prices had taken a dive into the red on Monday early morning after a report of a 10-day ceasefire proposal between the U.S. and Iran sparked a sharp decline in energy prices, but oil later gave back those losses after Houthi militants in Yemen declared a maritime embargo on Saudi Arabia.
Brent crude for September delivery the global benchmark, gained 1.3% to settle at $89.22 a barrel, its highest settlement value since June 11, after falling to around $86.12 in morning action. It had also risen to an intraday high of $91.42 overnight, according to FactSet data.
The West Texas Intermediate crude contract for August delivery was up 0.9%, at $83.23 a barrel, the highest since June 12. Earlier, the U.S. benchmark was trading at just below $80 per barrel.
“The mention of a diplomatic ‘apparatus’ has encouraged traders to assume there is still an off-ramp, and as long as that remains the prevailing narrative, it’s acting as a ceiling on panic buying,” said Rebecca Babin, senior energy trader and managing director at CIBC Private Wealth.
“Traders have learned that some of the more escalatory rhetoric has often been walked back, so they’re waiting for evidence rather than pricing the threat alone,” she told MarketWatch on Monday.
Another factor is market positioning. Last week, investors added to bullish positions while short sellers covered their bets, meaning much of the buying that fueled the initial rally has already taken place. As a result, after months of sharp swings driven by Iran headlines, some traders are likely locking in profits and hesitant to chase the next leg higher, Babin added.
The latest developments come after the U.S. military announced a ninth consecutive night of attacks late Sunday, saying: “The strikes will continue degrading Iranian military capabilities used to attack commercial vessels and civilian mariners transiting the Strait of Hormuz.”
The U.S. has moved a number of warplanes, including refueling aircraft, to the Middle East, the New York Times reported, raising fears of a return to all-out war between the U.S. and Iran. Iran on Saturday said it had formally withdrawn from the ceasefire agreement; U.S. President Donald Trump had previously said that the ceasefire was over. Iran targeted sites in Jordan, Kuwait and Bahrain on Sunday, the Associated Press reported, adding that Iran said the U.S. had struck a nuclear power plant under construction in southwest Iran.
In the view of Stephen Innes, managing partner at SPI Asset Management, the brief retreat in oil prices on Monday morning “does not mean the market is relaxed,” but rather that “investors are still treating the conflict as something they recognize and believe they can compartmentalize.” The renewed hostilities are “being priced primarily as an oil, inflation and regional risk event rather than the beginning of a systemic shock,” he added.
Also limiting the downside in oil prices was an announcement by Yemen’s Iran-backed Houthi rebels on Monday of a “maritime embargo” targeting Saudi Arabia, in response to a blockade on Yemen and a recent attack on the country’s Sanaa International Airport.
The deputy head of the Houthi media office, Nasruddin Amer, said on X that the Bab al-Mandeb strait — a key gateway to the Red Sea through which around 12% of the world’s trade usually passes — will be closed in response to what he called Saudi Arabia’s “unjust blockade on Yemenis for over 10 years.”
Mike Murphy, Steve Goldstein and Tomi Kilgore contributed.
