WTI rises 2.2%, Brent falls 0.3% as supply hopes clash with Middle East tensions

A pumpjack operates near Bakersfield, California, on Friday (local time). [AFP]
A pumpjack operates near Bakersfield, California, on Friday (local time). [AFP]

Oil prices closed mixed Monday (local time), as expectations of greater supply following the US easing of sanctions on Russia collided with fears of disruption after Yemen's Houthi rebels struck key Saudi Arabian oil facilities.

West Texas Intermediate crude for November delivery rose $2.25, or 2.22 percent, to settle at $103.66 per barrel on the New York Mercantile Exchange. Brent crude for December delivery fell $0.31, or 0.28 percent, to close at $109.55 per barrel.

Prices initially fell on expectations of increased supply after President Donald Trump waived a significant number of Russia-related sanctions provisions, but geopolitical tensions in the Middle East limited the losses.

The Iran-backed Houthi rebel group said Monday it had carried out large-scale retaliatory strikes against six targets in Saudi Arabia, including key oil facilities, an international airport and military bases.

Houthi military spokesperson Yahya Sari said the strikes were "retaliation for Saudi Arabia's brutal aggression," which he said included more than 200 airstrikes on the Yemeni capital Sanaa and other areas over the preceding 48 hours. Sari claimed the group had "successfully carried out six high-intensity military operations" using ballistic and cruise missiles as well as drones.

Among the targets the rebels claimed to have hit were multiple facilities belonging to Saudi Aramco, the state-owned oil giant that forms the backbone of the Saudi economy.

Tensions also persisted in the Strait of Hormuz, a critical chokepoint for Middle East crude shipments. Iran's Islamic Revolutionary Guard Corps said Sunday that a tanker had struck a mine in the southern part of the strait, triggering a fire and explosion.

"Continued attacks on vessels transiting the Strait of Hormuz, with crude flows still below pre-conflict levels, are providing support to prices," said Giovanni Staunovo, an analyst at UBS.

Expectations of greater crude supply, however, capped the upside for prices.

Trump exercised his authority Friday to waive a significant number of sanctions provisions targeting Russia, including measures that imposed steep tariffs on countries purchasing Russian energy. The move is widely seen as an effort to boost energy supply and stabilize prices ahead of November's midterm elections.

Energy consultancy Gelber and Associates said the waivers could lead to higher Russian fuel exports, but cautioned that uncertainty over implementation specifics and the duration of the exemptions made it difficult to say whether the supply increase would be sustained.


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