Oil Prices Swing as Brent Tops $105 Amid Riyadh Airport Attacks, Hurricane Isaias and Russia Energy Ceasefire

NEW YORK — Oil prices whipsawed on Monday, erasing early losses to trade higher, as traders weighed hopes for improved supply from a U.S.-brokered "energy ceasefire" between Russia and Ukraine against fresh Middle East violence and a powerful hurricane bearing down on the U.S. Gulf Coast.

Brent crude, the international benchmark, traded around $105.50 a barrel in morning trading in New York, up about 0.8%. U.S. benchmark West Texas Intermediate crude rose about 0.8% to roughly $92.60 a barrel.

Both benchmarks had fallen about 1.5% earlier in the session, with Brent dipping to around $103, before buyers returned amid doubts that the Russia-Ukraine agreement would quickly add to global supplies.

Prices remain sharply higher than a year ago. Brent has climbed about 65% over the past 12 months, driven largely by the conflict involving Iran and repeated disruptions to energy flows in the Middle East.

'Energy ceasefire' offers brief relief

Prices initially fell after President Donald Trump declared an "energy ceasefire" between Russia and Ukraine, under which the two countries agreed not to target each other's energy facilities.

The announcement raised expectations that more Russian fuel, particularly diesel, could reach global markets, easing concerns about tight supplies of refined products.

But the early selling faded as traders questioned how quickly any supply boost would materialize and focused on risks elsewhere.

Riyadh airport attacks raise tensions

Concerns about the Middle East kept a floor under prices. Yemen's Iran-aligned Houthi rebels targeted Riyadh's King Khalid International Airport again on Sunday, a day after an attack that killed 12 people and injured more than 300, according to Saudi officials.

The attacks have shut down operations at the airport and prompted Trump to consider joining Saudi Arabia in retaliating against the Houthis. Any broader military escalation could heighten fears of disruption to oil production and shipping in one of the world's most important energy regions.

At the same time, there were signs of possible diplomacy. Al Jazeera reported that Iran was ready to help facilitate dialogue between Saudi Arabia and the Houthis, according to CNBC.

Fresh attacks on commercial tankers in the region have also kept traders on edge. Tanker traffic through the Strait of Hormuz, the narrow waterway through which a large share of the world's oil passes, recently fell to a two-month low.

However, improved oil loadings through the strait and continued operations on Saudi Arabia's East-West pipeline, which allows the kingdom to bypass Hormuz, have helped ease some supply worries.

Hurricane Isaias threatens Gulf output

Adding to the upward pressure, Hurricane Isaias strengthened into a Category 3 storm with winds of about 120 mph as it approached the U.S. Gulf Coast, forcing energy companies to curtail offshore oil production.

The Gulf of Mexico is a key U.S. oil-producing region and home to a large concentration of refineries. Storms in the area can disrupt both crude output and fuel production, often pushing up prices for gasoline and other refined products.

Singapore-based bank UOB said in a note Monday that the "pressure on oil prices could remain on the upside" as the hurricane intensified.

Volatile week

Monday's moves follow a period of sharp price swings. Brent retreated last week from around $110 a barrel after Trump said the United States would hold off on new strikes against Iran ahead of next month's midterm elections, easing fears of further escalation.

But renewed attacks in Saudi Arabia, threats to shipping and the hurricane have kept prices well above $100 a barrel for the international benchmark.

The gap between Brent and WTI has also remained unusually wide, at more than $12 a barrel, reflecting the Middle East's outsized impact on internationally traded crude. Brent is the benchmark for most oil traded worldwide, including Middle Eastern supplies, while WTI tracks oil produced in the United States.

Impact on consumers and economies

High oil prices are weighing on economies around the world, particularly in countries that rely heavily on imports.

India, one of the world's largest crude importers, could see some relief from any decline in prices, but Brent above $100 a barrel continues to pressure the rupee, domestic fuel costs and corporate profit margins.

In the United States, elevated crude prices have kept gasoline costs high, adding to inflation pressures and becoming a political issue ahead of the midterm elections.

Central banks around the world are also watching energy prices closely, as higher fuel costs can feed into broader inflation and complicate decisions on interest rates.

What to watch

Traders will be watching the path of Hurricane Isaias and any damage to Gulf Coast energy infrastructure in the coming days. Developments in the Middle East, including any U.S. military involvement against the Houthis, the security of shipping lanes and progress toward diplomacy, are also likely to drive prices.

Investors will also be looking for signs that the Russia-Ukraine energy ceasefire holds and translates into increased fuel exports.

With multiple supply risks unfolding at once, analysts expect oil prices to remain volatile in the near term.