Oil retreats from recent highs as Iran conflict risks keep markets on edge

Oil prices slid on Monday after peaking, yet fears of renewed military conflict over Iran persisted. Crude prices fell toward $102 a barrel, with Brent crude dipping below $116, despite worries that strikes against Iran might resume if tensions escalated in the region. U.S. President Donald Trump announced on Sunday he would soon decide whether to negotiate with Tehran or resume military operations, as threats involving Iran and Yemen’s Houthi rebels continued to exacerbate security concerns.

Iran was reportedly ready to retaliate, potentially hitting Israel and the United Arab Emirates, while Saudi Arabia and Houthis faced off in intensified clashes over the weekend. The Houthis announced they struck King Khalid International Airport in Riyadh as retaliation for Saudi attacks on Sanaa and other Yemeni locations on Saturday.

Despite the tensions, Middle Eastern crude exports returned to near pre-war levels. However, any fresh escalation could disrupt energy supplies and spark further price volatility. In currency markets, the U.S. dollar experienced slight declines on Monday, trading near 101.69 on the index, a 0.12% drop from the prior session. The index has slipped about 0.5% this month, though it gained nearly 3% over the past year.

The U.S. dollar was quoted at around RM4.0855 against the Malaysian ringgit, only marginally unchanged from the previous trading session. The exchange rate has remained relatively stable over the past month, while the ringgit has appreciated by about 3.28% against the greenback over the past year. For Malaysia, fluctuations in crude prices and the ringgit remain crucial for the domestic fuel-price outlook, considering the country’s dependence on global energy markets.

Higher oil prices could raise costs for fuel imports and businesses, but the overall impact hinges on Malaysia’s dual role as an oil producer and consumer, as well as government subsidy policies and exchange-rate movements.