Oil prices rose on Monday, with Brent crude climbing 2.25% to $107.06 a barrel and US West Texas Intermediate (WTI) crude gaining 2.07% to $93.92, amid escalating geopolitical tensions and concerns over potential supply disruptions.
Here are the key factors driving the rise in crude oil prices.
Houthi attacks raise supply concerns
Oil prices gained after Yemen’s Iran-backed Houthi militants carried out a deadly missile attack on Riyadh’s international airport in Saudi Arabia. The attack heightened regional tensions and raised concerns over the safety of oil shipments through the Red Sea and surrounding waterways.
Two tankers were also attacked over the weekend, adding to concerns about the security of maritime oil routes and the potential for further disruptions to energy supplies.
Russia-Ukraine energy ceasefire in doubt
US President Donald Trump said on Sunday that Russia and Ukraine had agreed to an “energy ceasefire”, but provided few details about its terms. In a brief social media post, Trump said the ceasefire had taken effect immediately and urged both sides not to violate it.
However, Ukrainian President Volodymyr Zelenskyy said Russian strikes had continued to hit energy infrastructure despite the announcement.
“It is increasingly evident that Russia is unwilling to accept an energy ceasefire proposed by the United States and intends to continue its terrorist air attacks against our people and communities,” Zelenskyy said in a post on X on Monday. He added that Russian forces had attacked six energy facilities that day.
The conflicting accounts have cast doubt on whether the proposed truce will ease disruptions to energy infrastructure and supplies.
Tanker freight costs surge
Maritime security concerns have intensified following fresh attacks on commercial vessels near the Strait of Hormuz, a critical route for global energy shipments.
The UK Maritime Trade Operations reported that a tanker was struck by a drone near Sohar, Oman, while another vessel was damaged while transiting the strait.
The heightened risks have also pushed up shipping costs. Daily rates for tankers transporting oil from the Arab Gulf to North Asia have surged to more than $1 million, compared with around $60,000 in January, according to ANZ, as cited by The Wall Street Journal.
Higher freight costs and the threat of further attacks could add to the expense and uncertainty surrounding global oil deliveries.
Goldman Sachs raises Brent price forecast
Against this backdrop, Goldman Sachs raised its December Brent crude price forecast to $90 a barrel from $85, factoring in a risk premium of just over $20 a barrel.
The investment bank said Brent could average around $125 a barrel in 2027 under a more severe scenario in which Gulf oil production remains 5 million barrels per day below February 2026 levels. Under its base-case scenario, the shortfall is estimated at 0.3 million barrels per day.
Goldman Sachs expects WTI crude to average $81 a barrel in December 2026 and $73 in 2027. It attributed the unusually wide discount of WTI to Brent, in part, to high shipping costs from the US to Europe.
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