Oil prices climbed to near two-week highs on Monday as attacks on Saudi Arabia overshadowed prospects of additional supplies after US President Donald Trump welcomed fresh Russian diesel exports and a Russia Ukraine energy ceasefire.
Brent crude futures rebounded from earlier losses, rising by $2.07 or 2 percent to $106.79 a barrel by 1321 GMT, highest since September 29. US West Texas Intermediate crude was at $93.54 a barrel, up $1.69 or 1.8 percent.
The Iran aligned Houthis claimed responsibility for Saturday’s strike on Riyadh international airport that killed 13 people and wounded more than 300, with further attacks reported on Sunday.
More attacks on tankers sailing through Strait of Hormuz have also been reported this month, threatening to slow recovery in Middle East crude exports seen in September.
United Kingdom Maritime Trade Operations reported that a tanker was struck by a drone near Oman Sohar while another was damaged transiting Hormuz.
SEB commodities analyst Bjarne Schieldrop said the sense of normality of exports from Strait of Hormuz was shattered last week and fresh attacks by Houthis on Saudi Arabia helped to lift prices.
He said hard choices over what to defend will increasingly have to be made including oil infrastructure, military installations, royal palaces, civilian airports or other.
Goldman Sachs in a note raised Brent price forecast for December to $90 a barrel from $85, estimating risk premium of just over $20 a barrel.
It forecast WTI prices, which are unusually low versus Brent because of high US Europe shipping costs, to average $81 in December 2026 and $73 in 2027.
In the Gulf of Mexico, energy majors Shell and BP were seeking to redeploy personnel and restore production at their platforms after Hurricane Isaias made landfall early on Saturday.
Meanwhile ICE gasoil futures fell 2.3 percent to $1,449 per metric ton after Trump said on Friday that Russia will immediately supply more than 300,000 metric tons or 2.25 million barrels of diesel to US and global markets, with more to come later.
PVM analyst Tamas Varga said immediate impact of deal is questionable as Russia refining capacity has been severely reduced, however Moscow has partially lifted ban on diesel exports allowing 500,000 tons or around 3.7 million barrels to be released onto international market, equivalent to roughly one day of US consumption and around 13 percent of global demand.
Trump also unexpectedly announced on Sunday that Ukraine and Russia had agreed to an energy ceasefire. Ukrainian leader Volodymyr Zelenskiy accused Russia of violating the ceasefire on Monday while Russia did not comment.
International Energy Agency chief Fatih Birol said all members should assess whether additional diesel releases are necessary and countries which have not yet fully delivered pledged volumes should accelerate releases prioritising diesel. (Reuters).
