Oil pares gains as Hormuz uncertainty, Houthi attacks keep supply risks elevated

Oil prices experienced a modest recovery on Monday, with Brent Oil Futures rising 0.5% to $83.98 a barrel and Crude Oil WTI Futures gaining 0.3% to $78.44 a barrel. However, this rally was tempered by uncertainty surrounding the reopening of the Strait of Hormuz and fresh attacks attributed to Iran-backed Houthi militants. Despite progress in talks, the reopening of the key waterway remains uncertain, with Iran dismissing direct negotiations with the U.S. and demanding an end to the U.S. naval blockade and sanctions.

The Houthi group claimed an attack on Saudi Arabia's Jazan refinery, while Saudi Arabia reported a fire at the Aramco refinery had been extinguished. Additionally, disruptions in the Red Sea and Black Sea have heightened supply risks, with Iran-backed militants striking Saudi-aligned government targets and a Saudi tanker in the Gulf of Aden.

While some concerns eased after Ukraine pledged not to target non-Russian oil tankers, the Caspian Pipeline Consortium terminal in Kazakhstan remains vulnerable, potentially disrupting roughly 1.8 million barrels per day of crude exports.