Brent crude futures slipped 1.4% to $107.27 a barrel and West Texas Intermediate dropped 2.0% to $103.68 by 08:31 ET, even though both contracts had gained at least 6% over the previous week. The price decline came after the American Petroleum Institute reported U.S. crude stocks unexpectedly rose by 7.14 million barrels in the week to Sept. 11, far above the 1.8‑million‑barrel draw analysts had forecast.
The inventory surprise coincided with continued geopolitical tension in the Middle East. Iran‑backed Houthi militants attacked Saudi Arabia, prompting the kingdom to shut a key east‑west pipeline that had served as an alternative to the Strait of Hormuz. Saudi Arabia also halted loadings at its Yanbu port, though it offered additional ship‑to‑ship transfers to Asian refiners off Oman’s Sohar port. Houthi forces have increased their influence over parts of western Yemen, giving them leverage over the Bab el‑Mandeb Strait chokepoint. In Libya, production at three oil fields was suspended, adding further supply constraints.
Despite the supply worries, the broader market reaction was muted. The 10‑year U.S. Treasury yield briefly touched its highest level in nearly two decades, a move linked to earlier oil price volatility. Meanwhile, the U.S. Strategic Petroleum Reserve has been drawn down by nearly 130 million barrels in 2026, leaving the reserve at about 285.36 million barrels, according to Energy Information Administration data.
On the monetary‑policy front, markets assigned a 92% probability to a Federal Reserve rate hike at the conclusion of its policy meeting on Wednesday, reflecting continued expectations of tighter financing conditions.
Overall, the combination of a larger‑than‑expected U.S. inventory build and ongoing Middle‑East supply disruptions produced a modest pullback in oil prices, even as the market remains sensitive to both geopolitical developments and U.S. monetary‑policy expectations.
