Oil prices moved higher as the shutdown of a key Saudi crude pipeline stoked worries about tighter supply, while signs emerged that Washington might still be pursuing a diplomatic path on Iran.
Brent crude climbed 1% to settle below $106 a barrel, after earlier surging as much as 5%, while West Texas Intermediate hovered near $101 a barrel. The initial jump followed the outage of Saudi Arabia's east-west pipeline, which feeds the Red Sea terminal at Yanbu with a capacity of roughly 7 million barrels per day. That line has become a vital route to bypass the Strait of Hormuz, particularly since the war with Iran disrupted Persian Gulf exports.
Around midday in New York, prices gave back a portion of those gains after US President Donald Trump posted a series of messages on social media suggesting progress in both the Iran conflict and the Russia-Ukraine war. Trump stated that Kyiv and Moscow had agreed not to strike energy infrastructure, and he described Iran as "very eager" to reach a deal quickly. He also indicated that the US remains open to engagement with Tehran, though Iranian state media reported that officials there denied Trump's claims.
Ukrainian President Volodymyr Zelensky responded by saying that Ukraine would pause strikes on Russian energy targets if partners could ensure that Moscow genuinely halts further attacks on critical Ukrainian infrastructure. Still, traders took advantage of the diplomatic remarks to unwind increasingly crowded long positions. The 9-day relative strength index for crude had been in overbought territory for the past week, suggesting room for a pullback.
Kpler noted that trend-following commodity trading advisers are now at 100% maximum long positioning in Brent, indicating limited room for additional buying. Meanwhile, investors weighed conflicting reports about when the Saudi pipeline might resume operations. The Associated Press cited two regional officials saying the line could be out for weeks, while US Energy Secretary Chris Wright said on Monday he expects it to restart "very quickly." Saudi Aramco did not respond to questions about how long the disruption would last.
The market impact will also hinge on how much crude from Yanbu's storage can be tapped, how long it takes to restore flows, and how much oil can still move through the Strait of Hormuz. Wright expressed confidence that crude shipments through the strait would increase in the coming weeks, noting that over 12 million barrels moved through the chokepoint overnight.
Suvro Sarkar, head of energy research at DBS Bank, said Yanbu's inventories could support exports for five to seven days, but a longer outage would deliver a "massive shock." He suggested that prices could test $120 a barrel in the short term until repair progress becomes clearer. WTI October futures rose 1.3% to settle at $101.39 a barrel, while Brent November futures gained 1% to close at $105.68 a barrel.