Oil Falls 2.16% to $101.04 Despite Weekly Gains and Supply Risks
Key Facts
West Texas Intermediate crude futures fell 2.16% to $101.04 a barrel, while Brent futures declined 1.89% to $114.51 by 0426 GMT on Monday, Oct. 26, according to Reuters. The drop followed strong gains in the previous week, as concerns about renewed military action in the Middle East eased amid reports of mediation efforts. Oil analyst Vandana Hari said the concerns had "eased this morning, but the calm may be temporary." Prices remained shaped by a balance between the possibility of de-escalation and ongoing attacks, supply risks and shipping risks. The two benchmark crudes ended the previous week higher after attacks in Saudi Arabia claimed by the Houthis.
Brent rose 6% in the week ended Friday, Oct. 23, while WTI gained 2.3%. In Friday's session alone, prices settled about $3 a barrel higher after Houthi attacks in Saudi Arabia raised concerns about energy supplies, according to Reuters. The Houthis said they targeted an airport and oil facilities in Saudi Arabia on Saturday. Saudi Arabia said on Sunday it had intercepted more missiles and drones, though Reuters' report did not specify that all the projectiles targeted oil facilities and airports. These events explain why the risk premium rose at the end of the week, even as prices fell in Monday trading.
The Associated Press reported that the Saudi military spokesman said air defenses intercepted and destroyed a ballistic missile and a drone launched toward Riyadh, while the Houthis claimed responsibility for the attack. In a separate incident, Saudi authorities said debris from the interception of two ballistic missiles in Khamis Mushait and Ahad Rafidah governorates injured two people. The authorities added that the debris damaged three buildings and seven vehicles. These accounts distinguish the projectiles Saudi Arabia said it intercepted from the damage caused by falling debris. Attacks on Saudi territory also keep energy and shipping risks in oil prices, despite concerns temporarily easing at the start of the week.
On the diplomatic front, Qatari mediators traveled to Tehran on Sunday as part of efforts to ease regional tensions in coordination with the United States, according to an official briefed on the situation and cited by Reuters. Hari said much of the previous week's oil gains were tied to concerns about a resumption of military action, and that those concerns eased on Monday morning as mediation efforts emerged. But the analyst warned that the calm might not last. She said U.S. President Donald Trump had not dispelled market expectations that strikes on Iran could follow the U.S. midterm elections scheduled for Nov. 3. The possibility of escalation therefore remained alongside mediation efforts, while Monday's price action did not settle the direction of future risks.
Disruptions to commercial shipping through the Strait of Hormuz and the Bab el-Mandeb remain channels through which the conflict affects companies and markets, according to Reuters. U.S. Energy Information Administration data provide context for price volatility in previous months: Brent futures topped $100 a barrel on July 23, then traded between $79 and $98 through Sept. 8. After Sept. 9, futures again topped $100 as attacks on energy infrastructure in the Middle East and Russia escalated, according to the agency. The attacks cited by the agency included Saudi Arabia's East-West Pipeline and oil tankers near Bab el-Mandeb. This trajectory shows how supply risks and disruptions to maritime routes intersected with military developments to shape oil volatility.
In the United States, refinery utilization averaged 95% in the third quarter of 2026, and refineries processed the largest volume of crude for that quarter since 2019, according to the EIA. In its forecast issued on Oct. 6, the agency raised its estimate for Brent's average price in the fourth quarter of 2026 to $105 a barrel, up $14 from the previous month's forecast. The agency tied the forecast to restrictions on oil flows from the Middle East that could persist through the quarter. The Qatari mediation effort and the possibility of military developments after the Nov. 3 election remain among the factors markets are watching, while shipping risks through Hormuz and Bab el-Mandeb continue. The sources did not specify when a mediation outcome might be announced or how these risks might develop.