Oil rallied as dented Ukraine peace hopes, and Yemen tensions revive risk premiums

Oil prices settled more than $1 higher on Monday as a confluence of geopolitical setbacks—specifically the stalling of diplomatic momentum in Eastern Europe and intensifying military activity in Yemen—forced a re-entry of risk premiums into the market.

Brent crude futures rose $1.30, or 2.1%, to settle at $61.94 a barrel. 

WTI crude gained $1.34, or 2.4%, to close at $58.08 a barrel.

The session’s gains marked a sharp reversal from Friday’s retreat, as the market recalibrated following a series of developments over the weekend. 

The optimism that had characterised the preceding week—fuelled by reports of progress in high-level talks between the Ukrainian and US administrations—met significant friction after Moscow accused Ukraine of a drone strike on a Russian presidential residence. The Kremlin’s subsequent announcement that it would review its position in peace negotiations significantly clouded the outlook for a near-term ceasefire, which traders had previously priced as a bearish catalyst for 2026.

Beyond Eastern Europe, supply-side anxiety was exacerbated by fresh instability in the Middle East. Saudi-led coalition airstrikes in Yemen, targeting separatist forces in the eastern province of Hadramout, re-established the region as a high-risk corridor. Market observers noted that these strikes serve as a reminder that regional de-escalation remains fragile, keeping supply-disruption headlines at the forefront of market sentiment.

Written by: Aiman Haikal