Brent Falls 1.89% to $114.51 as Qatar Moves to Ease Tensions
Key Facts
Brent futures fell $2.21, or 1.89%, to $114.51 a barrel, while West Texas Intermediate dropped $2.23, or 2.16%, to $101.04 at 0426 GMT on Monday, October 26. The decline came as investors watched a Qatari effort to ease regional tensions, with Qatari mediators traveling to Tehran on Sunday in a coordinated effort with the United States, according to an official briefed on the efforts. Both benchmarks retreated after strong gains late the previous week. Brent closed more than $3 higher on Friday, ending the week up 6%, while WTI rose 2.3%. But the diplomatic move coincided with continuing supply risks after the Houthis said they had targeted sites in Saudi Arabia over the weekend.
Oil analyst Vandana Hari said concerns about renewed military action in the Middle East, which had driven much of crude’s rise the previous week, eased on Monday morning. “But this relief may be temporary,” she added. The price decline points to a retreat in some of the risk premium associated with the escalation, but does not by itself establish that physical supply risks have passed. Priyanka Sachdeva of Phillip Nova said the pullback reflected position adjustments and risk management more than any meaningful improvement in the supply outlook. She added that risks around the Strait of Hormuz remained, indicating that the market continued to weigh hopes of de-escalation against the risk of continued disruption.
The Houthis said they had targeted pumping stations on Saudi Arabia’s East-West oil pipeline and Riyadh airport over the weekend. Saudi Arabia said on Sunday it had intercepted more missiles and drones. The developments brought the risks to regional energy supplies back into focus, despite the effect of mediation reports on prices in early trading. Friday’s gains followed those concerns, before both benchmarks fell at the start of the week. In this context, Turkish President Recep Tayyip Erdogan said a resumption of attacks on Iran would destabilize the region and harm countries that were not party to the conflict.
Current supply risks coincide with International Energy Agency estimates that paint a mixed picture of improving supplies in September and a fragile recovery. Global supply increased by 2.5 million barrels per day month on month to 102.3 million barrels per day, led by Gulf producers, according to the agency’s October report. But it forecast supply to fall by an average of 5.8 million barrels per day to 100.7 million barrels per day in 2026, before rising by 7.7 million barrels per day in 2027. The agency also said renewed attacks in the Gulf made the recovery fragile. On the demand side, it forecast global oil use in 2027 to fall by 620,000 barrels per day, or 0.6%, compared with 2025, despite an expected partial recovery.
In Singapore, International Energy Agency Executive Director Fatih Birol said on Monday he did not expect energy markets to return to pre-war levels in 2027. His comments come as Asian countries seek to strengthen supply resilience, while market expectations remain tied to the course of escalation and de-escalation. Singapore’s and Saudi Arabia’s energy ministries announced a joint intention to establish an arrangement to store Saudi crude in Jurong’s rock caverns. Storage operations are expected to begin in the second half of 2027, according to a statement carried by Singapore’s JTC. The arrangement remains proposed, while the start of operations is an expectation.
In the near term, Hari said investors’ expectations that strikes on Iran could occur after the U.S. midterm elections on November 3 had not faded. She added that volatility could remain high, with risks tilted to the upside. In Tehran, delegations from Saudi Arabia, Pakistan and Turkey met Iranian officials on Monday in an effort to avert renewed fighting, and participants agreed to continue discussions on expanding cooperation, particularly on regional peace and security. The statement did not specify the date or location of the next meeting. Markets are therefore entering the next period tracking two parallel paths: regional negotiations and the risk of renewed attacks.