Crude Oil Price: Crude oil hit a six-month high, but fell 2 percent on Monday. WTI crude fell 2.11 percent, or $2.17, to $101.09 a barrel. At the same time, Brent crude also fell 1.85 percent, or $2.16, to $114.5 a barrel. Now the big question is why oil has become cheap when Saudi Arabia is being attacked?

In fact, the drop on Monday came after a big jump on Friday. On Friday, fears of an attack by Houthi rebels sent oil prices soaring by nearly $3 a barrel. Brent crude was up 6 percent and WTI was up 2.3 percent for the week. After such a big surge, the market saw a little lull on Monday. Apart from this, earlier investors have become wary of the upcoming policy decision of the US Federal Reserve (US Fed). This caution has led to some softening in prices at higher levels.

Attacks on Saudi Arabia continued over the weekend

Although the price has fallen slightly today, the crisis in the oil market is not over. The continued attacks on Saudi Arabia have raised fears about oil supplies around the world. Conditions were very bad there on Saturday and Sunday as well. Houthi rebels claimed they attacked an airport and oil facilities in Saudi Arabia on Saturday.

On the other hand, Saudi Arabia said it shot down several more missiles and drones in the air on Sunday. Saudi’s main airport was damaged in an earlier Houthi attack, where operations could only resume on Sunday. The insurgent group has threatened to continue targeting the airport in the future.

Will the price go up to $120?

Where oil prices will go in the coming days will largely depend on the status of the Strait of Hormuz and the security of oil bases. Brent crude has already crossed the $117 per barrel level. Market insiders say that global oil prices could reach $120 per barrel if there is any obstruction in the movement of oil tankers or ships through the Strait of Hormuz. However, if any concrete initiative is taken from both sides to reduce the tension, profit booking can also lead to a big drop in prices.

Ajit Mishra, Senior Vice President, Research, Religare Broking, says that the market trend is bullish right now, but it is completely dependent on the daily news. He advises that traders should avoid running after a sudden surge. Instead, they should keep an eye on ongoing tensions between countries, signals from the US Fed and weekly oil stock figures. According to Mishra, rising tensions between the US and Iran, fears of military action, attacks on Saudi Arabia and threats to sea lanes are keeping prices high.

Preparations to attack Iran after November 3

Navneet Damani, head of commodity research at Motilal Oswal Financial Services, said the increasing attacks around Hormuz and Saudi Arabia have once again raised questions about the security of oil bases and exports. This fear has driven up prices. According to reports, the US and Israel plan to attack Iran’s energy targets after the US midterm elections on November 3. This includes the nuclear facilities near Natanz. Iran has also clearly warned that there will be dire consequences if Washington or Tel Aviv launch an attack. After this statement, the atmosphere of fear in the market has increased.

Why have all the promises to increase supply failed?

A number of attempts have been made so far to ease fears over oil supply, but they have failed to bring down prices. The International Energy Agency (IEA) has spoken of drawing more oil from its emergency stocks. At the same time, the G7 countries have also talked about releasing 100 million barrels of additional oil into the market, but this is actually an intensification of their already ongoing program. Even the first shipment of Russian diesel destined for the US could not stop the rise in prices.

Market people are no longer in a mood to trust only paper advertisements. They want to see if these measures will actually increase the supply of oil in the market. The movement of crude oil through the Strait of Hormuz has improved slightly, but rising vessel fares, shipping problems and persistent security threats are reducing confidence in exports. Oil is expected to remain expensive until supplies actually return to normal.