Oil Prices Hold Steady as Ukraine Peace Hopes Dim and Yemen Tensions Flare
Crude holds near $83 as geopolitical risks from Ukraine to Yemen keep traders on edge.
Calm Before the Storm
Crude futures barely budged Monday, hugging the $83-a-barrel mark as traders weighed fading hopes for a swift end to the Russia-Ukraine war against fresh saber-rattling in the Red Sea.
From Kyiv to Sana’a, Risk Premiums Return
Over the weekend, Ukrainian drones struck another Russian refinery while Houthi rebels claimed a missile hit on a Liberian-flagged tanker transiting the Bab el-Mandeb. Neither event moved the needle dramatically, yet both reminded investors that oil’s safety cushion remains razor-thin.
“The market is exhausted by headlines, but it can’t ignore them,” said Helima Croft, RBC’s chief commodity strategist. “One miscalculation and we’re looking at triple digits faster than most models predict.”
What’s Keeping Prices in Check—for Now
- U.S. inventories rose for a fifth straight week, the longest streak since mid-2022.
- China’s April crude throughput slipped to its lowest seasonal level in five years.
- A stronger dollar is capping gains for non-dollar buyers.
Supply Tightrope
Despite those bearish signals, global spare capacity is still hovering near 3%, the slimmest margin since 2018. Russia’s two-week export dip—caused by Ukrainian drone damage—has already erased half of OPEC+’s pledged cuts, leaving traders jittery over summer gasoline demand.
What Happens Next
Diplomats in Geneva insist back-channel talks between Moscow and Kyiv have not collapsed, yet Ukrainian officials privately rule out ceding occupied territory. Meanwhile, the U.S. Navy is drafting contingency plans for escorting commercial vessels through the Red Sea if Houthi attacks intensify after Ramadan.
Bottom line: the calm in oil markets feels more like a coiled spring than a genuine détente.