Crude oil benchmarks declined on Tuesday, heading toward their first drop in nearly a week as the prospect of fresh Russian diesel supplies countered geopolitical anxieties stemming from attacks in the Gulf.
Brent crude fell by $1.18, or 1.1 percent, to reach $105.47 a barrel by 09:25 a.m. Saudi time, while US West Texas Intermediate crude dropped $1.17, or 1.3 percent, to $92.57 a barrel. The retreat followed an increase of nearly $2 a barrel during the prior trading session, which had pushed Brent to its highest level since Sept. 15.
Market pressures eased after US President Donald Trump stated that Russia had agreed to export diesel to global markets. The US administration temporarily suspended sanctions on Russian fuel that had been enacted to reduce Moscow's revenue for the war in Ukraine, though lawmakers from both American political parties stated that the arrangement appears to violate domestic legislation barring Russian energy imports.
Analysts at ING noted that the development faced substantial uncertainty, writing that “there is considerable scepticism over the Russia-Ukraine energy ceasefire, particularly with reports that Russia has hit Ukrainian energy targets since Trump announced it.”
At the same time, traders monitored Gulf energy infrastructure following weekend strikes by Iran-aligned Houthis against Riyadh’s international airport and reports of tanker attacks near the Strait of Hormuz. The incidents raised fears of renewed bottlenecks along primary shipping lanes, threatening a recovery in Middle East supplies recorded in September.
“Fresh diesel supply from Russia and steadier Saudi flows are offering some relief, yet the market still looks more worried about the risk of further hits to ships or pipelines in the Gulf than it is reassured by extra barrels,” said Tim Waterer, chief analyst at KCM Trade.
Logistical strains have also expanded across the sector. Ministers from the OPEC and non-OPEC Declaration of Cooperation reported that insurance and freight expenses have surged beyond one-third of the commodity's total value, disrupting cargo operations. On Monday, OPEC Secretary General Haitham Al Ghais said the group had trimmed its projected annual oil demand growth to 400,000 barrels per day, down from an initial estimate of 1.4 million barrels per day.
