Oil Futures Fall as Traders Weigh Saudi Supply Risks and Demand

Oil futures fell Monday as traders balanced threats to Saudi energy infrastructure against concern that elevated prices could weaken consumption, after weekend Houthi claims and Saudi missile interceptions.

West Texas Intermediate (WTI) futures fell 2.19% to $101 a barrel Monday, while Brent crude futures lost 1.89% to $114.51. The declines left traders weighing the risk of a supply interruption in Saudi Arabia against the chance that expensive crude would curb consumption.

The move came after a sharp rise in oil on Friday, when Houthi strikes in Saudi Arabia revived worries about global energy supply. The Houthis said Saturday they had targeted Riyadh’s main airport and oil facilities. Saudi authorities said they intercepted additional missiles and drones Sunday. The airport resumed some operations that day despite damage from earlier strikes, while the Houthis threatened further attacks.

The weekend developments have focused traders on the vulnerability of Saudi oil assets. Michael Alfaro, chief investment officer at Gallo Partners, estimated that geopolitical uncertainty had added roughly $20 a barrel to prices. He said a substantial strike on Saudi Arabia’s East-West pipeline or further damage to refining facilities could push prices sharply higher. But Alfaro also warned that high prices could weigh on consumption. If Brent rose above $120, $130 or $140 a barrel, he said, demand destruction would intensify.

“The real challenge is refining capacity,” Alfaro said, describing the issue as a longer-term structural problem that could extend into 2027 and beyond. He cautioned that disruptions could leave a deeper market constraint lasting into 2027 and later.

The U.S. Department of Energy authorized a release of as much as 400,000 barrels from the Strategic Petroleum Reserve on Friday in response to disrupted supplies at a refinery in Louisiana. U.S. producers are adding some drilling rigs but remain cautious about major new spending, Alfaro said. He added that companies were not committing significant capital to add rigs or bring new production online amid price volatility and geopolitical risks. Longer-dated contracts have also risen amid supply concerns, including oil and diesel futures with later delivery dates.

Saudi Arabia plans to start storing crude oil in Singapore in the second half of 2027 to strengthen its Asian supply chain.