Oil soared above $105 a barrel Monday morning in the wake of geopolitical turmoil, with an Iran-backed group launching a deadly strike on a Saudi airport and Ukraine accusing Russia of attacking energy facilities in spite of a ceasefire declared by President Trump.
Brent crude oil futures jumped 1.9% to $106.73 a barrel by about 9:40 a.m. ET, while West Texas Intermediate rose 2.1% to $93.73.
The benchmarks initially fell after Trump announced over the weekend that Russia and Ukraine had agreed to stop targeting each other’s energy facilities.
He also said Russia’s President Vladimir Putin vowed to supply more than 4 million tons of diesel to the global market, potentially helping lower prices.
But Ukrainian President Volodymyr Zelensky said Monday that Russia has continued to strike energy facilities.
On the ceasefire, Zelensky said, “We support it, but I have not heard approval of this proposal from the Russian side.”
National average gasoline prices have remained stubbornly above $4 a gallon, and diesel – which often impacts the costs of food, apparel and other consumer goods – has soared above $6.
The commander-in-chief has been eager to tamp down prices ahead of the November midterms, as frustrated Americans report affordability concerns.
But fighting in the Middle East conflict has ramped up, and experts have pointed out challenges to Trump’s efforts to lower gasoline prices.
A Saudi-led coalition said Monday it’s facing another round of drone and missile strikes from Yemen’s Houthi rebels.
The Iran-backed terror group repeatedly launched attacks on an international airport in Riyadh over the weekend, killing at least 13 people.
The escalation threatened Saudi Arabia’s efforts to maintain energy production during the global oil crunch.
The kingdom vowed to stand firm in the face of the attacks, going forward with a major energy conference scheduled for Thursday. However, heads of oil majors including BP, ExxonMobil and Shell have cancelled plans to attend, a sign of ongoing safety fears in the region.
Meanwhile, Hurricane Isaias has forced oil producers off the US Gulf Coast to shut down production, further restricting global supply after months of conflict in the Middle East.
Trump has signed an executive order to allow a more widespread use of tax-exempt diesel and secured a diesel release agreement with Europe, but experts have warned both of these initiatives could have little impact on US prices at the pump.