Brent crude oil prices traded lower on Tuesday but remained near $106 a barrel, holding on to recent gains as escalating tensions in the Middle East and continued attacks on energy infrastructure in the Russia-Ukraine war kept supply concerns elevated.
Brent crude futures were trading 0.50% lower at $106.13 a barrel at last check. The international oil benchmark had climbed for three consecutive sessions before Tuesday's decline, following a sharp rally on Monday.
Why Are Brent Crude Oil Prices Near $106 a Barrel?
Oil prices remain elevated as traders assess the risk of further supply disruptions amid escalating geopolitical tensions in the Middle East.
The latest attacks on Saudi Arabia's capital, Riyadh, have heightened concerns about the security of critical infrastructure and energy shipments across the region.
Iran-backed Houthi militants in Yemen claimed responsibility for a missile strike on King Khalid International Airport in Riyadh over the weekend. The attack killed at least a dozen people and injured more than 300, according to reports.
Subsequent missile and drone attacks have added to concerns about a broader escalation and the potential impact on regional energy supplies.
The developments have increased pressure on the Trump administration to consider greater assistance to Saudi Arabia as the conflict involving the Houthis intensifies.
Russia-Ukraine War Adds to Oil Market Uncertainty
The ongoing Russia-Ukraine conflict is another factor influencing crude oil prices. Ukrainian President Volodymyr Zelenskyy said Russia continued to target Ukraine's energy infrastructure despite US President Donald Trump's announcement of an energy ceasefire.
The continued strikes have raised doubts about whether the proposed truce will prevent further disruptions to energy facilities. Ukraine has also vowed to continue its attacks against Russia.
Meanwhile, the prospect of additional Russian diesel supplies entering the global market has offered some counterweight to concerns about tighter energy supplies.
Trump said Russia would increase diesel exports following discussions with Russian President Vladimir Putin, as Washington seeks to bring Moscow back to negotiations.
However, uncertainty over the ceasefire and the extent of additional fuel supplies has limited the market impact of the proposed arrangement.
Oil Prices: Where Did Brent Crude and WTI Settle on Monday?
Crude oil prices rose sharply on Monday as concerns over the Middle East conflict outweighed expectations of additional Russian diesel supplies.
Brent crude futures settled 1.8% higher at $106.65 a barrel, while US West Texas Intermediate (WTI) crude futures gained around 2% to settle at $93.74 a barrel.
Both benchmarks rebounded after initially coming under pressure as traders assessed the potential implications of the proposed Russia-Ukraine energy ceasefire.
What Should Investors Watch Next?
Crude oil prices are likely to remain sensitive to developments in the Middle East, particularly any further attacks affecting Saudi Arabia, regional energy infrastructure or key shipping routes.
Traders will also monitor the implementation of the proposed Russia-Ukraine energy ceasefire and whether additional Russian diesel supplies reach global markets. Any escalation that threatens oil production or transportation could provide further support to Brent crude prices, while a meaningful easing of geopolitical risks could trigger a pullback.
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