Crude fell to $106.83 overnight, climbed to about $110.70 by early afternoon in New York and then gave most of that back, trading near $109.20 shortly before 3 p.m. Eastern, below Friday's $109.86 settlement. Heating oil ended up flat and natural gas fell about 6%.
Oil traders tried both versions of the war on Monday. By mid-afternoon in New York, they had not committed to either.
Brent crude fell as low as $106.83 a barrel in the overnight session, about 2.8% below Friday's settlement of $109.86. It then climbed through the European afternoon and the U.S. morning to a high of about $110.70 shortly before 2 p.m. Eastern, a rebound of about 3.6% from the low. The rally did not hold. By about 2:55 p.m., Brent was trading near $109.20, roughly 0.6% below Friday's settlement. From low to high, the session covered about $3.87.
Heating oil, the U.S. benchmark for diesel, followed a similar path. It was down nearly 3% in the early hours, up about 1.2% at 1:47 p.m. and roughly unchanged shortly before 3 p.m. U.S. natural gas went its own way, down about 6% at about $3.04 per million British thermal units.
The two stories on offer
The case for lower prices was in place before the session opened. The administration's waiver of new Russia sanctions, which Treasury Secretary Scott Bessent said had lifted only "the diesel embargo," promises more Russian fuel. Energy Secretary Chris Wright has put Gulf crude flows at about 80% of prewar volumes, an estimate the Energy Department has not published.
The case for higher prices did not go away either. Houthi strikes on Saudi Arabia continued. Iran's newly confirmed defense minister warned of "enormous damage" if the U.S. resumes strikes. In Tehran, where Russian Foreign Minister Sergei Lavrov made his first visit of the war, Iranian Foreign Minister Abbas Araghchi said the war waged by the United States and Israel, "combined with the economic blockade, constitutes the principal source of insecurity in our region." Some lawmakers in Washington have pressed to block the Russian diesel purchases.
No single development lined up with either turn. The overnight decline came as traders weighed the waiver and Wright's remarks; the climb came as the Gulf threats accumulated; the afternoon fade came without a clear trigger. Price moved first in one direction and then the other, and the record does not say which headline, if any, did the work.
Why the round trip matters
A market that can swing almost 3.6% in a session without new physical information is a market in which the risk premium, not the supply balance, is setting the price. That matters beyond oil. Treasury yields, which fell overnight as oil dropped, were higher by early afternoon. Fed funds futures continue to lean heavily toward a December rate increase. Bessent called September's hot inflation reading "an energy shock" in a television interview on Sunday and said prices will come down once the U.S. gets "to the other side of the Iran conflict." A premium that moves this much in a day makes that timing harder to judge.
Market implications
One reading is that supply relief is real but uneven. Flows are improving by the administration's account, the diesel embargo has been lifted, and the market traded below $107 on that reassurance before New York opened.
A second reading is that physical risk dominates and dips get bought. The threats to Gulf shipping and infrastructure are unchanged, and buyers pushed Brent above Friday's settlement within hours of the low.
By 3 p.m. the tape had validated neither. The settlement will be the first test of which camp held the close.
What to watch
Monday's Brent and diesel settlements; Wednesday's U.S. inventory report; any confirmed attack on a tanker or Gulf energy facility; the congressional push against the Russian diesel deal; and any change in Washington's position on Iran's conditional seven-day plan to reopen the Strait of Hormuz, which President Trump rejected in September. A second session with a range near $4 would confirm that the premium, not the barrels, is setting the price.