On Monday, U.S. West Texas Intermediate futures fell 2.19% to $101 a barrel, while Brent crude futures decreased by 1.89% to $114.51 a barrel. This decline followed a significant rally on Friday, triggered by attacks from Yemen's Houthi militants on Saudi Arabia, which raised fears of disruptions to global energy supplies.
The situation remains tense, with the Houthis claiming to have targeted Saudi Arabia's main airport and oil facilities, while Saudi authorities reported intercepting additional missiles and drones.
Michael Alfaro, chief investment officer at Gallo Partners, noted that geopolitical uncertainty has added approximately $20 to oil prices, emphasizing that if prices rise above $120 to $140 per barrel, demand destruction could occur. He also warned that damage to refining infrastructure could lead to long-term challenges in global energy markets, potentially extending into 2027.
In response to supply disruptions, the U.S. Energy Department authorized the release of up to 400,000 barrels from the Strategic Petroleum Reserve, although U.S. producers remain hesitant to significantly increase capital expenditures due to the volatile market conditions