Crude oil prices rose by more than $1 on Monday as traders braced for potential supply disruptions in the Middle East due to rising tensions in Yemen.
Brent crude futures rose $1 or 1.7 per cent to $61.64 a barrel and the US West Texas Intermediate (WTI) crude futures were up $1.10 or 1.9 per cent to $57.84 per barrel.
In Yemen, the Saudi-led coalition has vowed to retaliate against any military moves by the main southern separatist group backed by the United Arab Emirates (UAE).
Meanwhile, Iran declared a “full-scale war” against the US, Israel, and Europe.
Reuters reported that an escalation of fighting on Thursday killed two people from the separatist group Southern Transitional Council’s Hadhrami Elite Forces in Hadramout, the group said in its statement. Saudi airstrikes followed early on Friday, targeting the STC forces in the area.
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.
Russia accused Ukraine of launching a drone attack on the Russian presidential residence in northern Russia, due to which Moscow now plans to review its position in peace talks.
Ukraine dismissed Russian statements about the drone attack and its foreign minister said Russia was seeking “false justifications” for further strikes against its neighbour, which it has been attacking since February 2022.
Prior to these developments, Ukrainian President Volodymyr Zelenskiy had said on Monday that significant progress had been made in talks with US counterpart Donald Trump and agreed that US and Ukrainian teams would meet next week to finalise issues aimed at ending Russia’s war in Ukraine.
The US government also said President Trump had also held a “positive call” with Russian President Vladimir Putin about the war in Ukraine.
Data on US stockpiles for the week ended December 19 remain missing as the report, which was expected to be published on Monday was delayed without assigning a new publication time.