Dec 29 – Oil prices settled more than $1 a barrel higher on Monday as Russia accused Ukraine of attacking President Vladimir Putin’s residence, while traders braced for potential supply disruptions in the Middle East due to rising tensions in Yemen.
Brent crude futures rose $1.30, or 2.1%, to settle at $61.94 a barrel. U.S. West Texas Intermediate crude gained $1.34, or 2.4%, to close at $58.08.
Russia on Monday accused Ukraine of launching a drone attack on the Russian presidential residence in northern Russia, due to which Moscow now plans to review its position in peace talks. Ukraine dismissed Russian statements about the drone attack and its foreign minister said Moscow was seeking “false justifications” for further strikes against its neighbor.
“Unless Russia surprises the world by backing away from previous demands regarding territory and security guarantees, we are looking for the complex to edge higher through the rest of this week and next week,” oil trading advisory firm Ritterbusch and Associates said.
Prior to the drone attack claims, Ukrainian President Volodymyr Zelenskiy had said on Monday that significant progress had been made in talks with U.S. President Donald Trump and agreed that U.S. and Ukrainian teams would meet next week to finalize issues aimed at ending Russia’s war in Ukraine.
TENSIONS IN YEMEN RAISE SUPPLY CONCERNS
The oil market’s focus has also shifted toward the Middle East, Gelber & Associates said in a note. “Fresh instability, including Saudi air strikes in Yemen, is keeping supply-disruption headlines in play,” the energy consultancy said.
Yemen’s Saudi-led coalition said any military moves by the main southern separatist group in the eastern province of Hadramout that undermined de-escalation efforts would be countered to protect civilians, the Saudi state news agency reported on Saturday.
An escalation of fighting on Thursday killed two people from the separatist group Southern Transitional Council’s Hadhrami Elite Forces in Hadramout, the group said in its statement. Saudi airstrikes followed early on Friday, targeting the STC forces in the area, a source told Reuters.
Strong Chinese waterborne crude imports are also helping tighten oil markets, said UBS analyst Giovanni Staunovo.
He added that $60 a barrel was the soft floor for Brent, with prices expected to recover slightly in 2026 because non-OPEC supply growth is likely to stall in the middle of 2026.
Energy investors awaited data on U.S. stockpiles for the week ended December 19. The report, which was expected to be published at 10:30 a.m. ET on Monday, was delayed without assigning a new publication time.
An extended Reuters poll showed U.S. crude oil inventories were expected to have fallen in the week ended December 19, while distillate and gasoline inventories were expected to have risen. [EIA/S]
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