Crude oil retreated modestly from a six-month high, even as U.S. President Donald Trump signaled readiness to resume strikes against Iran.
Brent crude traded below $116 per barrel after gaining more than 6% last week, while WTI hovered near $102 per barrel.
Trump told Fox News that whether to reach a deal with Tehran or "finish this thing off completely," the moment for a decision is approaching.
In recent days, Washington ordered an expansion of evacuations of diplomatic personnel across the Middle East.
A person familiar with Tehran's thinking said Iran is preparing for a fresh wave of bombing around the U.S. midterm elections on November 3, and is ready to retaliate, with targets including Israel and the UAE.
Former U.S. Ambassador to Israel Daniel Shapiro assessed the risk of renewed hostilities with Iran after the Israeli and U.S. elections.
Over the weekend, attacks resumed between Yemen's Iran-backed Houthi forces and Saudi Arabia, raising the risk to energy shipments.
The group claimed it struck Riyadh's King Khalid International Airport in response to Saudi strikes on Sanaa and other parts of Yemen on Saturday.
Brent crude has risen about 90% this year, with refined products posting even larger gains, intensifying inflation.
The conflict is about to enter its ninth month, and now carries the risk of another escalation.
Traders remain on alert that hostilities could restart after Israel's election this week and the U.S. midterms afterward.
Should the situation intensify, crude shipments through the Strait of Hormuz would face new risks; despite Iranian attacks on vessels, crude exports have already recovered to near pre-war levels.
This narrow waterway connecting the Persian Gulf to global markets has been at the center of the conflict.
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