Oil prices fell Monday as optimism about improved supplies outweighed concerns about Middle East tensions.
Brent crude futures for December delivery dropped 0.77% to $103.91 a barrel. U.S. West Texas Intermediate futures for November declined 1.26% to $90.69 per barrel.
President Donald Trump said in a social media statement Sunday that Russia and Ukraine have agreed to an "ENERGY CEASEFIRE" in their war, adding, "Both parties have agreed. Do not break it!"
Ukrainian President Volodymyr Zelenskyy said in a social media post that Ukraine supports the ceasefire and that it is important for Russia to support it as well.
Prospects of more Russian energy reaching global markets have also risen after Trump said Friday that Moscow will supply more than 4 million tons of diesel to the global market under a deal he struck with Russian President Vladimir Putin during a phone call.
In the Middle East, Iran's Minister of Foreign Affairs Abbas Araghchi called Saudi Arabia's Minister of Foreign Affairs Faisal bin Farhan bin Abdullah to discuss the region's recent escalation of events and efforts to address them, according to the Saudi state news agency. Al Jazeera reported Araghchi said Iran was ready to provide assistance to help start dialogue between Saudi Arabia and Yemen's Houthis.
Oil prices are expected to remain volatile in the near term as the U.S.-Iran conflict continues, while the impact of Hurricane Isaias on U.S. energy producers could also hurt supplies.
"The pressure on oil prices could remain on the upside as Hurricane Isaias strengthened to Category 3 with 120 mph winds as it approached the U.S. Gulf Coast, forcing energy producers to curtail offshore output," UOB said in a note Monday.
"Separately, Houthi missile strikes on Saudi Arabia's Riyadh airport on Saturday, which killed 12 people and injured over 300, have materially elevated Middle East risk premia," UOB added.
