West Texas Intermediate (WTI) crude oil prices were up 2.5% in Monday trading at 2:42 p.m. ET, reaching $58.17, as tensions flared in Yemen and hopes for a peace deal on the Russia-Ukraine front dissipated following unsuccessful talks between Kyiv and Washington.
In Yemen, the Saudi-led coalition has vowed to retaliate against any military moves by the main southern separatist group backed by the UAE, the Saudi state news agency reported on Saturday. Last week, an escalation of fighting killed two people from the separatist group.
Meanwhile, U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy said recent talks showed incremental progress toward a potential ceasefire framework, while acknowledging that key issues, including security guarantees and territorial arrangements, remain unresolved and subject to further negotiation.
Brent crude for February delivery rose 2.24% to trade at $62.00 per barrel.
The market appears to have shifted toward the Middle East, where new instability, including in Yemen, is making for strong supply-disruption headlines.
Ongoing conflicts and political friction have been creating market jitters and the risk of supply disruptions over the past couple of weeks.
Recent developments, such as the Ukraine war (including attacks on Russian energy infrastructure) as well as unrest in the Middle East has led investors to price in a small “risk premium” for crude.
However, oil price gains remain limited thanks to ongoing concerns about global oil inventories, with levels building significantly through 2025, driven by strong production growth from non-OPEC+ nations and OPEC+ unwinding cuts, outpacing modest demand. Forecasts suggest these inventory builds will continue into 2026, potentially exceeding 2 million barrels per day, as supply persistently outstrips demand, with China’s stockpiling adding to the volumes.
Commodity analysts at Standard Chartered have slashed their 2026 and 2027 oil price outlook by $15 per barrel, lowering the 2026 target to $63.50/bbl from $78/bbl, and 2027 prices to $67/bbl from $83/bbl, noting that the futures curve is now in contango from early-2026 onwards.
