A pumpjack operates after sunrise on October 16, 2026, in Kern County, California’s 22nd Congressional District, near Bakersfield, California, which has a long history of oil production.
Tama Mario | Getty Images
U.S. oil prices fell more than 2% on Monday as investors weighed the threat of further attacks on Saudi Arabia’s energy infrastructure against concerns that soaring prices could ultimately hurt demand.
US West Texas Intermediate Futures The price fell 2.19% to $101 per barrel. brent crude oil futures It fell 1.89% to $114.51 per barrel.
Crude oil prices since the beginning of the year
The rebound came after a sharp jump on Friday after an attack on Saudi Arabia by Yemen’s Houthi militants reignited concerns that global energy supplies could be disrupted.
Tensions remained high over the weekend, as the Houthis announced Saturday that they had targeted a major airport and oil facilities in Riyadh, Saudi Arabia. Saudi authorities announced on Sunday that they had intercepted additional missiles and drones.
Saudi Arabia partially resumed operations at its main airport on Sunday despite damage from previous attacks, even as the Houthis threatened further attacks.
Continuing hostilities have heightened concerns about the vulnerability of Saudi Arabia’s energy infrastructure, with traders increasingly focused on the risk of large-scale disruption to production, refining and export facilities.
Michael Alfaro, chief investment officer at Gallo Partners, estimated on CNBC that geopolitical uncertainty has already pushed oil prices up by about $20 a barrel.
I think the theme we’re facing right now is that the uncertainty is off the charts. Given the risk premium currently baked into oil, that’s about $20 per barrel.
michael alfaro
Chief Investment Officer, Gallo Partners
A major strike against Saudi Arabia’s east-west pipeline and additional refining infrastructure could significantly increase prices, but further increases could ultimately hurt consumption, he added.
“What you would expect if the oil price goes above the Brent price of $120, $130, $140 per barrel, you’re going to see further demand destruction,” Alfaro said.
In addition to immediate threats to crude oil supplies, damage to refining infrastructure could pose a more permanent challenge to global energy markets.
“The real challenge is to hone production capacity,” he said, warning that the disruption could lead to long-term structural problems extending beyond 2027.
Meanwhile, Saudi Arabia plans to start storing crude oil in Singapore from the second half of 2027, with the aim of strengthening the resilience of its Asian supply chain, according to the two countries’ energy ministers.
In the United States, the Department of Energy on Friday authorized the release of up to 400,000 barrels from the Strategic Petroleum Reserve to address supply disruptions at a refinery in Louisiana.
Still, the outlook for additional supply from U.S. producers remains uncertain, with companies reluctant to make large new investments amid price volatility and geopolitical risks.
Alfaro added that U.S. producers are adding some drilling rigs but remain cautious about significantly increasing capital spending.
“We don’t really see any significant capital investment additions to bring in new rigs or bring new production online,” he said.
