Brent tops $105 as doubts grow over supply boost from Trump's 'energy ceasefire'

Oil prices today: Brent, WTI rise

President Donald Trump announced that Russia and Ukraine would not target each other's energy facilities. In a related context, Al Jazeera reported that Iran expressed readiness to assist in initiating dialogue between Saudi Arabia and Yemen's Houthis. Given the ongoing Middle East conflict and potential impacts from Hurricane Isaias, oil prices are anticipated to experience volatility in the near term.

Oil prices experienced a reversal of initial losses early Monday, despite the possibility of improved supply dynamics following President Trump's declaration of an "energy ceasefire" between Russia and Ukraine.

Futures for the international benchmark Brent crude, due for December delivery, increased by 0.92% to $105.68 per barrel. Meanwhile, U.S. West Texas Intermediate futures for November rose by 0.95% to $92.72 per barrel. Both benchmarks had recorded a decline of approximately 1.5% earlier in the trading session.

"Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!" Trump stated in a social media post from the United States on Sunday.

Following this announcement, oil prices rebounded after Ukrainian President Volodymyr Zelenskyy expressed support for the ceasefire but cautioned that Moscow must reciprocate.

Additionally, the likelihood of increased Russian energy supplies to global markets has grown following Trump's announcement on Friday, which indicated that Moscow would provide over 4 million tons of diesel to the world under a deal negotiated during his conversation with President Putin.

On a different note, the Saudi-led coalition, which is combating the Iran-backed Houthis in Yemen, reported facing another series of drone and missile attacks aimed at Saudi Arabia.

This development follows a phone call made by Iran's Minister of Foreign Affairs Abbas Araghchi to Saudi Arabia's Minister of Foreign Affairs Faisal bin Farhan bin Abdullah, in which they discussed the recent escalation of regional tensions and strategies to address it, as reported by the Saudi state news agency.

Al Jazeera indicated that Araghchi had stated Iran was prepared to assist in facilitating dialogue between Saudi Arabia and the Houthis.

Looking ahead, oil prices are likely to remain unstable in the short term as the U.S.-Iran conflict persists, compounded by the potential detriment of Hurricane Isaias on U.S. energy producers that could affect supply chains.

According to a note from UOB issued on Monday, "The pressure on oil prices could remain on the upside as Hurricane Isaias strengthened to Category 3 with 120 mph winds while approaching the U.S. Gulf Coast, prompting energy producers to reduce offshore production."

Moreover, UOB noted that "Houthi missile strikes on Saudi Arabia's Riyadh airport on Saturday, which resulted in the deaths of 12 individuals and injuries to over 300, have significantly heightened the risk premium associated with the Middle East."