Oil prices pulled back from nearly six-month highs on Monday as renewed diplomatic efforts involving Iran reduced some of last week's geopolitical premium, while continuing Houthi attacks on Saudi Arabia kept the threat of further supply disruption firmly in focus.
By Carolina Curiel
Published October 26, 2026
What Readers Should Know
MONTREAL (Oil Monster): Oil prices moved lower Monday as traders took some profit after last week's sharp rally and assessed a new round of diplomatic efforts aimed at reducing tensions involving Iran.
Brent crude futures were down $1.57, or 1.35%, at $115.15 per barrel by 12:39 GMT.
U.S. West Texas Intermediate crude futures fell $2.11, or 2.04%, to $101.16 per barrel.
The declines came after both benchmarks surged on Friday, when escalating attacks on Saudi Arabia pushed crude to its highest closing levels since late April.
Monday Market Snapshot
Brent: $115.15/barrel | -$1.57 | -1.35%
WTI: $101.16/barrel | -$2.11 | -2.04%
Brent last week: +6%
WTI last week: +2.3%
Note: Monday's prices are an intraday Reuters snapshot at 12:39 GMT, not final settlement prices.
The pullback came as regional governments stepped up efforts to reopen diplomatic channels with Tehran.
Officials from Saudi Arabia, Turkey and Pakistan were expected to hold talks with Iranian officials in Tehran on Monday.
The discussions represent the first high-level contact between the countries since Saudi Arabia became a major pressure point in the wider conflict.
Qatari mediators also traveled to Tehran on Sunday as part of a separate effort to reduce tensions in coordination with the United States.
Earlier mediation involving Pakistan and Qatar helped produce an interim agreement in June, although that deal later collapsed.
OilMonster Market Lens
Monday's decline does not necessarily mean the market believes the supply threat has passed.
The fall follows a rapid $3-plus rally on Friday and comes as traders receive their first meaningful diplomatic signals after another escalation in Saudi Arabia.
The market is therefore balancing two very different possibilities: negotiations could reduce the geopolitical premium, or another successful attack on major Saudi infrastructure could quickly restore it.
The diplomatic activity comes as attacks on Saudi infrastructure continue.
Yemen's Iran-aligned Houthi movement said Monday that it had attacked pumping stations on Saudi Arabia's East-West crude oil pipeline as well as King Khalid International Airport in Riyadh.
Saudi Arabia had not immediately confirmed the claimed attack on the pumping stations.
The Saudi-led coalition said it intercepted a missile fired toward Riyadh and destroyed missile launchers in Yemen.
The coalition also reported strikes on Houthi military infrastructure, including tunnels, missile launchers and storage facilities.
The East-West Pipeline has become one of Saudi Arabia's most important pieces of energy infrastructure during the current conflict.
The system carries crude from eastern production areas across the kingdom to the Red Sea port of Yanbu, allowing Saudi barrels to reach international markets without passing through the Strait of Hormuz.
Saudi Arabia restarted the pipeline in September after earlier drone attacks damaged pumping infrastructure.
Saudi Aramco had been working to restore flows toward approximately 4 million barrels per day, while the system has maximum capacity of roughly 7 million bpd.
A confirmed disruption to the pipeline would therefore matter because it could weaken one of Saudi Arabia's most important alternatives to the Gulf export route.
Why the East-West Pipeline Matters
Route: Eastern Saudi Arabia to Yanbu on the Red Sea
Maximum capacity: About 7 million bpd
Recent restoration target: Around 4 million bpd
Strategic purpose: Allows Saudi crude to bypass the Strait of Hormuz
Saudi Arabia also continues to face attacks on civilian aviation infrastructure.
King Khalid International Airport in Riyadh partially resumed operations on Sunday after repeated attacks forced widespread flight cancellations.
Saudi authorities said Terminals 1 and 2 reopened for domestic and some international operations.
However, international airline schedules remain heavily disrupted.
Aviation analytics firm Cirium estimated that 4,071 of 4,736 scheduled flights at Riyadh airport were cancelled between October 8 and October 25, equal to approximately 86% of planned services.
The Houthis claimed another attack on the airport Monday and have warned airlines against using the facility.
The latest escalation is important for oil markets because the Saudi energy system depends on more than wells and export terminals.
Airports, pipeline pumping stations, ports, refineries, telecommunications and corporate control centers all form part of the infrastructure required to keep crude moving.
Saudi Aramco previously instructed employees at its Dhahran headquarters to evacuate and work remotely after attacks intensified in the kingdom's eastern oil-producing region.
The Dhahran complex contains an operations center used to monitor oil fields, pipelines, refineries and export terminals.
Aramco has not reported a broad shutdown of Saudi crude production.
OilMonster Market Lens
The market is increasingly pricing infrastructure resilience, not just production capacity.
Saudi Arabia may have barrels available underground, but those barrels still depend on pipelines, pumping stations, tanker terminals and functioning logistics networks to reach refiners.
That is why attacks on infrastructure can influence crude prices even when there has been no confirmed loss of production.
The conflict continues to affect commercial shipping around both the Strait of Hormuz and the Red Sea system.
Reuters reported that October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways since the Washington Institute for Near East Policy began tracking global maritime-security incidents in 2017.
The disruption has forced producers and traders to rely more heavily on shuttle tankers, ship-to-ship transfers and longer alternative routes.
Those workarounds have helped restore physical export volumes but have also contributed to historically high freight and insurance costs.
The renewed fighting with the Houthis also threatens another strategically important oil and trade route.
Houthi forces have pushed toward areas near the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden.
The waterway is important for shipments moving between the Indian Ocean, Red Sea and Suez Canal.
Saudi Arabia therefore faces risk on both sides of the Arabian Peninsula: Hormuz to the east and Bab el-Mandeb and the Red Sea system to the west.
Saudi Arabia's Two Chokepoint Problem
East: Strait of Hormuz disruption affects Gulf exports.
West: Houthi activity near Bab el-Mandeb threatens Red Sea shipping.
Domestic response: East-West Pipeline provides routing flexibility.
International response: Overseas storage can position barrels closer to customers before a disruption.
Saudi Arabia announced another part of that strategy on Monday.
Saudi Aramco plans to begin storing crude oil at Singapore's Jurong Rock Caverns from the second half of 2027.
The planned arrangement is intended to strengthen the resilience of Saudi crude supply to Southeast Asia and improve Singapore's emergency preparedness.
Saudi Arabia already maintains crude-storage arrangements in Japan and South Korea.
The Singapore plan would add another supply point closer to major Asian refining and trading markets.
Monday's decline follows a strong finish to the previous week.
Brent settled Friday at $116.72 per barrel after gaining $3.55, or 3.14%.
WTI closed at $103.27, up $3.80, or 3.8%.
Brent gained approximately 6% for the week, while WTI advanced 2.3%.
Those gains pushed both benchmarks to their highest settlement levels since late April.
Monday's pullback therefore leaves crude well above the levels seen earlier in October.
International Energy Agency Executive Director Fatih Birol added to longer-term supply concerns on Monday.
Speaking at an industry event in Singapore, Birol said he did not expect energy markets in 2027 to return fully to conditions seen before the Iran conflict.
Diesel availability remains particularly tight, while damaged infrastructure, shipping costs and regional disruptions continue to affect petroleum-product markets.
The IEA has already coordinated emergency stock releases and has said further action remains available if member governments determine it is necessary.
The United States also used emergency crude reserves late last week to address a separate domestic supply issue.
The Department of Energy authorized an exchange of up to 400,000 barrels from the Strategic Petroleum Reserve for Phillips 66's Lake Charles refinery in Louisiana.
The crude will come from the West Hackberry SPR site for immediate delivery.
The action is an exchange rather than a permanent sale.
Phillips 66 must return the borrowed crude plus additional premium barrels to the reserve.
400,000-Barrel SPR Exchange
Recipient: Phillips 66 Lake Charles refinery
Source: West Hackberry Strategic Petroleum Reserve site
Volume: Up to 400,000 barrels
Terms: Crude must be returned with additional premium barrels
Monday's price action shows how sensitive crude has become to any sign of diplomatic progress.
Saudi Arabia has said opening channels for negotiation is important, while Turkey, Pakistan and Qatar are also involved in efforts to reduce regional tensions.
If those discussions produce credible progress toward reducing attacks or reopening more normal commercial shipping, some of the risk premium built into Brent and WTI could unwind.
But if the talks fail while attacks on Saudi infrastructure continue, crude could quickly refocus on physical supply security.
What Oil Traders Are Watching Next
The Bottom Line
Oil is lower Monday, but it remains close to the highest levels seen in nearly six months.
The decline reflects renewed diplomatic activity and a correction after Friday's sharp rally, not evidence that Saudi supply risk has disappeared.
The Houthis continue to target Saudi infrastructure, Hormuz shipping remains disrupted and the East-West Pipeline itself is now part of the latest attack claims.
At the same time, Saudi Arabia is expanding alternative pipelines and overseas storage to make its supply system more resilient.
The next meaningful move in crude will likely depend on whether diplomacy reduces the threat to physical oil flows before another attack produces a confirmed supply loss.
Continue Reading
Oil Jumps $3 as Saudi Attacks Raise Supply Fears
Saudi Arabia to Store Crude Oil in Singapore to Bolster Asia Supply Security
Saudi Arabia Restarts East-West Oil Pipeline
Saudi Crude Exports Hit Five-Month High as Output Hits Record Low
Courtesy: www.reuters.com
