Oil prices retreat from six-month highs amid hopes of a de-escalation in the US-Iran trade war.
Oil prices fell during trading on Monday, October 26, 2026, after rising last week to levels close to their highest in six months, amid hopes of a de-escalation of military confrontations between the United States and Iran, while attacks on Saudi Arabia and the risk of disruption to oil supplies continue to cast a shadow over global markets.
U.S. West Texas Intermediate crude futures fell 1.7% to $101.51 a barrel, while Brent crude futures declined 1.28% to $115.23 a barrel by 7:44 a.m. GMT.
The decline came after a week of significant gains in oil prices, driven by escalating concerns about supply security in the Middle East, particularly following Houthi attacks on targets inside Saudi Arabia. These attacks heightened fears of a wider conflict and its impact on global oil flows. Brent crude ended last week up by about 6%, while West Texas Intermediate (WTI) crude posted weekly gains of 2.3%, after prices rose by about $3 a barrel on Friday amid growing concerns about further attacks on Saudi oil infrastructure.
The recent market movements coincide with intensified diplomatic efforts to contain regional escalation. Qatari mediators traveled to Tehran on Sunday as part of efforts to de-escalate tensions in coordination with the United States. High-level officials from Saudi Arabia, Turkey, and Pakistan are also scheduled to meet with the Iranian leadership in Tehran on Monday, marking the first contact at this level since the Houthi attacks on Saudi Arabia, backed by Iran, became a major flashpoint in the regional conflict.
Despite these diplomatic efforts, markets remain cautious about the potential for renewed military confrontations, particularly given the ongoing attacks targeting energy infrastructure. Vandana Hari, founder of Vanda Insights, an oil market analysis firm, said that concerns about renewed military action in the Middle East, which had driven up crude prices last week, eased during Monday’s trading, but she cautioned that this improvement might be temporary.
She added that US President Donald Trump’s statements did not dispel market expectations regarding the possibility of military strikes against Iran after the US midterm elections scheduled for November 3. She noted that oil price volatility is likely to persist at high levels, with risks remaining skewed towards higher prices, given the ongoing threats to supply.
In a development reflecting continued pressure on Saudi Arabia’s energy sector, the Houthis announced they had carried out attacks over the weekend targeting pumping stations on the Saudi east-west oil pipeline, as well as Riyadh’s airport. In response, Saudi Arabia announced it had intercepted more missiles and drones on Sunday, indicating continued security tensions despite diplomatic efforts to contain the conflict.
These developments come at a time when global markets are still reeling from the repercussions of the US-Israeli war on Iran, which began on February 28, and the resulting disruptions to commercial shipping through the Strait of Hormuz and the Bab el-Mandeb Strait, two of the most important strategic waterways for global energy trade. The Strait of Hormuz remains a major source of concern for oil markets, given its vital role in transporting oil supplies from the Gulf region to global markets. Any continued disruption to shipping through it could lead to higher transportation and insurance costs, and further downward pressure on crude oil prices.
In an effort to bolster the resilience of the region’s oil supply chains, the Saudi and Singaporean energy ministers announced on Monday that Saudi state-owned Aramco will begin storing crude oil in Singapore starting in the second half of 2027. The move aims to support the company’s ability to cope with supply disruptions and enhance the flexibility of its logistical operations in Asian markets, amid escalating geopolitical risks facing the energy sector.
For her part, Priyanka Sachdeva, head of market analysis at Phillip Nova, said the current decline in oil prices appears more to be a realignment of investment positions and risk management than a result of a genuine improvement in oil supply conditions. She added that the risks associated with the Strait of Hormuz remain significant, meaning that markets have not yet overcome the fundamental threats that drove prices higher in the recent period.
