Oil Prices Swing Amid Yemen Conflict and Supply Concerns

Oil prices saw significant fluctuations on Monday, October 5, as traders reacted to mixed developments in the West Asia conflict. Brent crude for December delivery briefly surged past $103 per barrel before settling around $102, marking a nearly 5% gain from the previous week. Meanwhile, West Texas Intermediate (WTI) fell 0.6% to $90.60 per barrel. Despite the volatility, OPEC+ members agreed to maintain their current output quotas for the following month.

The escalating conflict in Yemen added fresh uncertainty to the market. The Saudi-backed Yemeni government launched a large-scale military campaign to reclaim areas controlled by the Houthi rebels. Rashad Al-Alimi, head of the Presidential Leadership Council, vowed to fight until the country is liberated from the Houthis, describing them as a terrorist militia. The Houthis, backed by Iran, have intensified their attacks on Saudi oil facilities, disrupting the kingdom's crude exports.

Global inventories of oil have dropped to their lowest levels in five years, contributing to sustained high prices. Brent crude remains roughly 40% higher than its pre-war levels, despite a Group of Seven pledge to release up to 100 million barrels of emergency oil and diesel stocks. Traders remain wary of potential escalations in the West Asia conflict, particularly as Washington considers expanding its military presence in the Gulf region. Iran continues to target ships in the Strait of Hormuz, a critical waterway for global oil transport.