Market Overview
Oil prices moderated on Monday after President Donald Trump indicated that the United States is "open" to a rapid deal with Iran, a comment that tempered earlier gains driven by heightened geopolitical tension.
Crude Price Movements
At 16:19 ET (20:19 GMT), Brent crude futures for November delivery were up 1.6% at $106.28 per barrel, having earlier peaked at $109.74 during the session. U.S. West Texas Intermediate (WTI) futures for October delivery added 1.8% to $101.89 per barrel, after reaching a session high of $104.91.
Recent Price Drivers
Oil has surged nearly 20% over the past two weeks amid a resurgence of military strikes between the United States and Iran and an expanding conflict between Saudi Arabia and Iran‑backed Houthi militants in Yemen. The fighting threatens oil flows through two critical Gulf shipping corridors: the Strait of Hormuz and the Bab el‑Mandeb Strait.
Diplomatic Developments
A scheduled meeting of Gulf powers with Iran, intended to secure a commercial shipping arrangement through the Strait of Hormuz, was postponed. Oman’s foreign minister said the delay was "in the interests of consensus," and Iran’s foreign ministry pledged to coordinate with Oman on a new date, according to Fars News Agency. Trump later said Iran "wanted to make a deal, quickly and badly," and that the United States would decide whether to engage, describing the concept as "open."
Iranian Labor News Agency (ILNA) Report
ILNA reported that the United States is seeking a "step‑by‑step" agreement with Iran, which could precede Washington’s return to broader negotiations, citing Pakistani sources. Following Trump’s remarks and the ILNA report, oil pared its earlier gains.
Supply‑Side Concerns
Strait of Hormuz
Tanker traffic through the Strait of Hormuz has slowed to a fraction of pre‑war levels; before the conflict, roughly 20% of the world’s oil and liquefied natural gas transited the chokepoint.
Bab el‑Mandeb Strait
The Bab el‑Mandeb Strait, through which about 12% of worldwide trade passes, has become a fresh flashpoint. The Associated Press reported that Houthi militants seized the strategic Greater Hanish and Lesser Hanish islands, located roughly 160 km north of the strait, and have deployed fighters there.
Saudi East‑West Pipeline (Petroline)
Houthi drone attacks in Saudi Arabia’s Riyadh and Madinah regions forced the shutdown of the East‑West pipeline, a 1,200‑km conduit capable of transporting up to 7 million barrels per day. The pipeline provides an alternative export route to the Red Sea, bypassing the Strait of Hormuz, and accounts for roughly 4% of global crude oil supply. Saudi oil buyers and traders warned that if exports do not resume within days, the loss could reach that 4% figure. Regional officials indicated the pipeline could remain out of service for several weeks while repairs are undertaken.
Commentary from Market Observers
Yerbol Orynbayev, former World Bank governor of Kazakhstan, described the pipeline closure as "a huge blow," emphasizing its role in supplying 4% of world crude and its importance since the U.S.–Iran conflict began. He added that with no clear timeline for reopening, barrel prices have returned above $100, and oil‑driven price pressures are likely to intensify.
Parallel Developments
Ukraine‑Russia Energy Conflict
President Trump also called on Ukrainian President Volodymyr Zelenskyy not to target Russian diesel infrastructure, attributing recent strikes to fuel shortages. Both nations have reportedly agreed not to attack each other’s energy assets.
U.S. Diesel Prices
In the United States, the national average diesel price surpassed $6 per gallon for the first time, with AAA reporting a record high of $6.2301 per gallon on Monday.
Conclusion
Oil markets remain highly sensitive to geopolitical developments in the Gulf, with price movements reflecting both diplomatic signals and physical supply disruptions, notably the shutdown of Saudi Arabia’s East‑West pipeline and ongoing Houthi actions in the Red Sea region.