Oil prices dip after weekly gains amid shipping attacks and Saudi pipeline shutdown

Oil prices fell in early trading Monday after a sharp weekly advance, but remained elevated as fresh reports of attacks on shipping and a temporary shutdown of a major Saudi pipeline kept supply concerns at the forefront.

The screenshot shows West Texas Intermediate crude at $100.00 a barrel, down $2.43, or 2.37% at around 7.30am Tokyo.

Brent crude, the global benchmark, stood at $104.60, down $3.02, or 2.81%. Murban crude fell $3.02, or 2.47%, to $119.50. Natural gas was little changed at $2.831, down 0.003, or 0.11%.

The quoted prices are broadly consistent with Friday settlements reported by market sources: Brent closed at $104.61 a barrel and WTI at $100.05.

Both benchmarks nevertheless gained more than 8% over the week after briefly climbing above $107 and $104, respectively.

The decline came as traders weighed possible diplomatic efforts to restore shipping through the Strait of Hormuz against continued military and maritime threats.

The United Kingdom Maritime Trade Operations agency said it received a report Sunday that a projectile struck a vessel in the Strait, although details about the incident remained limited.

Iranian state media separately reported that an Iranian commercial vessel was hit near Qeshm Island, killing one person and injuring others.

The incidents came after Saudi Arabia temporarily closed its East-West oil pipeline as a precaution following a drone attack that Riyadh and Baghdad said originated in Iraq, where Iran-backed militias operate.

The pipeline is an important alternative route for moving Saudi crude without sending it through Hormuz.

The developments have heightened concern that the conflict could threaten both the main maritime chokepoint and the routes intended to bypass it.

Hormuz normally carries a substantial share of global oil and gas shipments, making any prolonged disruption highly sensitive for refiners, shipping companies and importing countries.

Iranian officials are expected to meet Gulf Arab representatives in Oman to present an agreement concerning shipping routes through the Strait.

However, Tehran has indicated that it will not fully reopen the waterway unless the US accepts several conditions, including demands linked to Iran’s control of the strait.

Washington rejects any arrangement that would recognize Iranian authority to impose fees on international shipping, according to reporting cited by regional media.

US Energy Secretary Chris Wright cautioned traders against assuming that the talks would quickly resolve the crisis.

He said alternative routes were currently carrying about 10 million barrels of crude and oil products a day, helping prevent an immediate global supply shock but leaving markets vulnerable to further attacks.

That uncertainty helps explain Monday’s price movement. Traders took profits after oil’s steep rally, while continuing to price in a significant geopolitical risk premium.

Natural gas prices were comparatively stable. The screenshot showed the contract at $2.831, down 0.11%, suggesting that traders were not yet pricing the latest maritime incidents as an immediate disruption to gas supplies.

Oil markets are more directly exposed because crude tankers depend heavily on maritime routes through Hormuz. Natural gas prices, particularly in the United States, are influenced more by domestic production, storage levels, weather and regional demand.

A prolonged conflict could still affect liquefied natural gas shipping and international gas benchmarks, but the impact would depend on whether attacks spread to gas carriers, export terminals or alternative maritime routes.

The near-term direction of prices will likely depend on three signals: whether shipping talks in Oman produce an enforceable arrangement, whether attacks continue against vessels and energy infrastructure, and whether Iran eases or tightens restrictions around Hormuz.

A credible reopening could push prices lower by removing some of the risk premium. But a failed diplomatic effort, another vessel attack or further damage to alternative oil routes could send Brent back toward its recent highs or beyond them.