Oil markets were broadly steady on Monday, consolidating last week’s strong advance as investors continued to weigh mounting supply risks across West Asia against forecasts pointing to slower global demand growth.
Brent oil futures added 0.1% to $88.62 a barrel by 00:42 ET (04:42 GMT), while West Texas Intermediate crude futures edged 0.1% lower to $81.37 a barrel.
The limited moves followed a particularly strong week for Brent, which climbed more than 5% as worsening U.S.-Iran tensions increased concerns about the security of regional energy infrastructure and shipping routes.
Strait of Hormuz disruption keeps supply premium elevated
Iran’s attacks on tankers have contributed to another slowdown in vessel movements through the Strait of Hormuz, while the U.S. naval blockade against Tehran remains in place.
Diplomatic prospects also showed little sign of improving over the weekend. Iran Foreign Minister Abbas Araqchi reiterated that Tehran was not holding direct negotiations with Washington, while the U.S. threatened further economic measures against the country.
Risks to regional shipping have also spread beyond the Persian Gulf. Yemen’s Iran-backed Houthis continued attacks against vessels around the Bab al-Mandab strait, bringing renewed uncertainty to another strategically important route for international energy flows.
The threat of further supply disruption has so far outweighed increasingly cautious forecasts for oil consumption.
Both the Organization of Petroleum Exporting Countries and the International Energy Agency lowered their respective forecasts for global oil demand in 2026 last week, but those revisions have done little to offset the geopolitical premium embedded in crude prices.
Refined products face greater strain than crude
The effects of the conflict are becoming particularly visible in refined fuel markets, according to ANZ analysts.
Diesel has “emerged as the tightest segment of the petroleum complex,” the analysts said, reflecting the combined impact of refinery outages, supply interruptions and constraints on maritime transportation.
Refinery disruption across the Persian Gulf has reduced diesel production and limited export availability even as worldwide demand for the fuel remains resilient.
That imbalance means the refined products market is experiencing more severe supply pressure than crude itself.
Russia-Ukraine conflict adds to diesel supply concerns
The continuing war between Russia and Ukraine represents another source of pressure for global fuel markets.
Kyiv has carried out additional attacks against Russian oil infrastructure, adding to existing concerns about the availability of refined products at a time when Persian Gulf production is already being disrupted.
The combination of constrained refinery operations, disrupted shipping routes and continued geopolitical instability suggests diesel supplies could tighten further in the coming months.
For crude markets, these risks continue to provide underlying support even as major energy organisations become less optimistic about the trajectory of global oil demand during 2026.
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