The Zhitong Finance App learned that international oil prices fell on Monday against the backdrop of rising expectations of improved supply. US President Trump said that Russia and Ukraine will no longer attack each other's energy facilities and announced that the two sides have reached an “energy cease-fire”; at the same time, after the Houthis attacked Saudi Arabia, Iran took the initiative to engage with Saudi Arabia, which is also viewed by the market as a sign that geographical tension may ease.
Specifically, the December futures price of Brent crude oil fell 1.65% to 102.99 US dollars per barrel; the November futures price of US WTI crude oil fell 1.92% to 90.09 US dollars per barrel.
Trump said in a statement on social media: “Effective immediately, there was an energy cease-fire during the Russian-Ukrainian war. Both parties have agreed. Don't break it!” Ukrainian President Zelensky later said on social media that Ukraine supports a cease-fire and stressed that it is “important” that Russia also supports the cease-fire.
The supply side also ushered in another potential benefit. Trump said on Friday that according to the agreement he reached in conversation with Putin, Russia will supply more than 4 million tons of diesel to the global market, which has raised expectations that more Russian energy will enter the market.
On the geopolitical side, according to the Saudi State News Agency, Iranian Foreign Minister Alagzi telephoned Saudi Foreign Minister Faisal to discuss the recent escalation of the situation in the region and response efforts. Al Jazeera reported that Alagzi said Iran is ready to provide assistance to help Saudi Arabia start a dialogue with the Houthis in Yemen.
However, the market still faces multiple risks. Bank of China (UOB) pointed out in a Monday report that Hurricane “Isaias” has intensified to a Category 3 hurricane, with wind speeds of 120 mph and approaching the US Gulf Coast, forcing energy producers to cut offshore production. The upward pressure on oil prices may still exist. The bank also said that the Houthis missile attack on Saudi Arabia's Riyadh airport on Saturday killed 12 people and injured more than 300 people, significantly increasing the risk premium in the Middle East. Furthermore, the continuation of the US-Iran conflict has also kept oil price expectations fluctuating in the short term.
Overall, expectations of improved supply are temporarily suppressing oil prices, but risk factors such as hurricanes, attacks in the Middle East, and the situation in the US and Iran are still present, and the crude oil market may continue to fluctuate in the short term.