Oil prices climbed by more than one dollar on Monday as traders positioned for potential supply disruptions stemming from Middle East tensions, while Russia accused Ukraine of launching a drone attack on its president's residence.
The February West Texas Intermediate (WTI) crude futures contract on the New York Mercantile Exchange increased by $1.34, or 2.36%, settling at $58.08 per barrel.
"The market's focus has shifted to the Middle East, where new instability, including Saudi airstrikes in Yemen, is causing a steady stream of supply disruption news," stated Gelber & Associates in a report.
The Saudi state news agency reported on Saturday that the Saudi-led coalition in Yemen declared any military action by the main southern separatist group in the eastern Hadramawt province that undermines de-escalation efforts would be met with a response to protect civilians.
In its statement, the coalition said escalated fighting on Thursday resulted in the deaths of two members of the Hadramawt Elite Forces, which are aligned with the separatist Southern Transitional Council. A source informed Reuters that Saudi Arabia conducted airstrikes earlier on Friday, targeting Southern Transitional Council forces in the region.
In a separate development, Moscow accused Ukraine of launching a drone attack on the Russian president's residence in northern Russia, prompting Moscow to announce a review of its stance in peace negotiations. Ukraine dismissed the Russian allegations concerning the drone attack, with its foreign minister stating that Moscow was seeking a "false pretext" for further strikes against its neighbor.
These developments occurred after Ukrainian President Volodymyr Zelenskiy stated on Monday that significant progress had been made in talks with his U.S. counterpart, Donald Trump, and that U.S. and Ukrainian teams would meet next week to finalize topics aimed at ending the Russian war in Ukraine.
Earlier on Monday, White House spokeswoman Caroline Levitt said Trump had also held a "positive call" with Vladimir Putin regarding the war in Ukraine.
Benchmark crude prices had fallen over 2% on Friday, partly due to increased hopes for a Ukrainian peace agreement.
Giovanni Staunovo, an analyst at UBS, suggested that $60 per barrel represents a soft floor for Brent crude, with prices expected to recover modestly by 2026 as non-OPEC+ supply growth is likely to stall by mid-2026.
Energy investors are also awaiting U.S. inventory data for the week ending December 19. The report, originally scheduled for release at 10:30 a.m. ET on Monday, was delayed without a new specified time.
An expanded Reuters survey indicated that U.S. crude inventories are expected to have decreased in the week to December 19, while distillate and gasoline stockpiles are forecast to have increased.
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