Oil prices ease but supply risks persist

Oil prices eased on Monday, but supply risks remained a concern as tensions in the Middle East and Eastern Europe persisted. Brent crude fell below US$109 a barrel, following a 10% surge last week, amid growing geopolitical risks. Violence between Saudi Arabia and Iran-backed Houthi rebels in the Middle East continued, with a Saudi helicopter crashing near the Yemeni border and Houthis targeting Yanbu, a vital Saudi oil export hub.

Three tankers were damaged in the Strait of Hormuz, prompting Iran's Islamic Revolutionary Guard Corps to claim the strait remained closed, only allowing passage with its authorization. This critical waterway is crucial for global oil shipments, and any disruption could threaten supply and energy prices worldwide.

In Europe, Ukrainian attacks caused fires at an oil export terminal and storage depot in St Petersburg, following more than 1,000 drones launched at Russia by Kyiv in one of the largest aerial assaults of the war. Meanwhile, US President Donald Trump reportedly reached an agreement with Russia on diesel exports and postponed further sanctions to preserve peace negotiations over Ukraine.

The ringgit strengthened 0.10% against the US dollar to 4.0800 on Monday, while the Malaysian currency remained relatively stable over the past month, weakening 0.05% against the greenback and remaining 3.45% stronger than a year earlier. The US Dollar Index, measuring the dollar against a basket of major currencies, traded at 101.84, essentially unchanged from the previous session.

Despite the ringgit's slight gain, sustained oil supply disruptions could raise fuel and transportation costs in Malaysia, potentially adding to inflationary pressures. However, the currency's modest improvement might provide some relief on imported goods priced in US dollars, though currency movements alone would not offset the effects of prolonged global energy price increases.