Oil slips but stays near six-month highs on Saudi attacks

By Seher Dareen

LONDON, Oct 26 (Reuters) – Oil prices fell on Monday after surging last week amid hopes of easing hostilities between the United States and Iran, but persistent attacks on key producer Saudi Arabia kept investors wary and prices near six-month highs.

Brent crude futures were down $1.57, or 1.35%, at $115.15 by 1239 GMT. US West Texas Intermediate crude futures were down $2.11, or 2.04%, at $101.16 per barrel. 

On Friday, prices settled nearly $3 higher. Brent finished the week up 6% and WTI ended 2.3% higher.

“With the jeopardy doubled by Houthi attacks into Saudi, any Brent price dips back to the lows of last week will find grateful buyers,” PVM Oil Associates analyst John Evans said.

“Corrective processes are notoriously difficult to quantify, but this one has nowhere near reached any sort of levels where bulls might abandon hope.”

Saudi Arabia, which along with Turkey and Pakistan was set to hold talks with Iranian officials in Tehran, said it was important to open channels for negotiations.

On Sunday, Qatari mediators traveled to Tehran as part of an effort to de-escalate regional tensions in coordination with the United States, an official briefed on the situation said.

Despite the mediation talks, attacks continued over the weekend with the Houthis saying they had struck pumping stations on Saudi Arabia’s East-West crude oil pipeline and Riyadh airport. Saudi Arabia said on Sunday it had intercepted more missiles and drones.

The effects of the US-Israeli war against Iran that began on February 28 continue to reverberate as companies adjust to the disruptions of commercial shipping through the key Strait of Hormuz and Bab el-Mandeb Strait caused by the conflict. 

October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways, according to data compiled by the Washington Institute for Near East Policy, a think tank that has tracked maritime security incidents worldwide since 2017.

Meanwhile, energy ministers from Saudi Arabia and Singapore said state-owned oil company Saudi Aramco will start storing crude oil in Singapore from the second half of 2027, to make Aramco’s supply chain in the region more resilient.

The head of the International Energy Agency, Fatih Birol, reiterated supply concerns, saying on Monday at an industry event in Singapore that he did not expect energy markets in 2027 to return to where they were before the Iran war.

(Reporting by Mohi Narayan in New Delhi and Colleen Howe in Beijing; Editing by Saad Sayeed, Christian Schmollinger, Emelia Sithole-Matarise and Tomasz Janowski)