Oil Price Today (October 26): Crude oil at $115, retreats from 6-month high despite lingering concerns. What are experts saying?

ETMarkets.com

Concerns over potential supply disruptions have driven oil prices higher following a series of attacks by Iranian-backed Houthi rebels across Saudi Arabia, including strikes on energy infrastructure.

Crude oil price on October 26

US crude futures declined $1.82, or 2%, to $101.48 a barrel, while Brent crude futures dropped $1.50, or 1.72%, to $115 a barrel. Both benchmarks had settled nearly $3 higher on Friday following Houthi attacks in Saudi Arabia that heightened concerns over energy supplies. Brent gained 6% over the week, while US West Texas Intermediate (WTI) rose 2.3%.

The attacks continued over the weekend, with the Houthis claiming to have targeted a Saudi airport and oil facilities on Saturday. Saudi Arabia said on Sunday that it had intercepted additional missiles and drones. The world's largest oil exporter partially resumed operations at its main airport on Sunday after damage from an earlier round of Houthi attacks, even as the group vowed to continue targeting the facility.

Last week, Saudi Aramco ordered the evacuation of its headquarters in Dhahran, near the Gulf coast and Bahrain, Reuters reported. Fighting between Saudi Arabia and the Yemen-based Houthis has intensified.

Meanwhile, Reuters reported that an oil spill from a tanker was detected off the coast of Umm Al Quwain in the United Arab Emirates, the country's Ministry of Climate Change and Environment said. The ministry did not disclose the cause of the spill, and authorities have yet to identify the vessel involved.

Clashes between the Houthis and a Saudi-led coalition backing Yemen's internationally recognised government have continued since the Iran-aligned group advanced towards the Bab el-Mandeb Strait last month. The strait is a key shipping chokepoint at the entrance to the Red Sea.

Where are prices headed?

Uncertainty over the course of the conflict continues to cloud the outlook for oil prices. JPMorgan analysts said the war's eventual trajectory remained difficult to assess. At the start of the conflict, the bank had expected the US administration to avoid crossing certain economic thresholds. Seven months later, many of those thresholds had been crossed, while a clear exit strategy remained elusive.

The threat of further supply disruptions has also reinforced expectations of higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks had highlighted how shipping disruptions could spread and intensify.

Goldman Sachs has outlined a scenario in which oil prices could climb to $120 a barrel if attacks on vessels in the Middle East escalate. In contrast, a return to normal export levels could bring prices down towards $80 a barrel. Struyven said shipping risks had become a key driver of oil prices, adding that the bank saw significant upside potential for crude. Goldman Sachs also expects natural gas and refined fuel prices to rise, with supply shocks having a greater impact on gas and refined products than on crude oil.