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Source: Newsmaker.id
Oil prices weakened on Monday (October 26) following a strong rally the previous week, though they remain near six-month highs. Brent crude fell 6.24% to US$110.82 per barrel, while WTI dropped 2% to US$101.19 per barrel. This correction comes amid hopes for an easing of U.S.-Iran tensions, even as attacks on Saudi Arabian facilities and infrastructure keep the market on edge.
Diplomatic efforts have returned to the spotlight, with mediators from Qatar traveling to Tehran—in coordination with the United States—to help de-escalate regional tensions. Senior officials from Saudi Arabia, Turkey, and Pakistan are also scheduled to meet with Iranian leadership. These developments have raised hopes that diplomacy could mitigate the risk of energy supply disruptions.
However, supply risks have not fully subsided, as Houthi attacks continued throughout the weekend. The group claimed responsibility for strikes on Saudi Arabia’s East-West crude oil pipeline pumping stations and Riyadh Airport. Saudi Arabia reported intercepting several missiles and drones, keeping the threat to energy infrastructure a primary market concern.
Disruptions to commercial shipping in the Strait of Hormuz and the Bab el-Mandeb Strait also continue to loom over the energy market. Data from the Washington Institute indicates that October has been the worst month for attacks on commercial vessels in the Strait of Hormuz and surrounding areas. This situation is likely to keep the geopolitical risk premium elevated, even as oil prices undergo a correction.
Meanwhile, Saudi Aramco plans to begin storing crude oil in Singapore in the second half of 2027 to strengthen regional supply chain resilience. Furthermore, IEA Executive Director Fatih Birol has warned that the energy market in 2027 may not necessarily return to pre-conflict conditions regarding Iran. Thus, the current correction in oil prices may remain limited as long as the risks of attacks and supply disruptions have not truly subsided.