Oil Prices Fall Amid Anticipation of Russian Diesel Supplies and Gulf Supply Concerns

Oil prices fell on Tuesday, after surging by about $2 per barrel in the previous session as traders assessed supply risks stemming from attacks on Saudi Arabia and the possibility of increased diesel supplies from Russia.

Brent crude futures dropped 61 cents, or 0.57 percent, to $106.04 per barrel by 0000 GMT, while U.S. West Texas Intermediate crude futures declined 47 cents, or 0.5 percent, to $93.27 per barrel.

U.S. President Donald Trump said Russia had agreed to supply diesel to global markets and that his administration had temporarily lifted U.S. sanctions on Russian fuel, which had been imposed to deprive Moscow of any revenue it might use to fund its war with Ukraine.

The additional supplies could help ease tightness in global fuel markets, thereby tempering some of the supply-related concerns that have recently supported crude prices.

However, lawmakers from both the Republican and Democratic parties in the United States said Trump’s deal with Russian counterpart Vladimir Putin appears to violate a U.S. law banning Russian energy imports until Moscow ends its aggression against Ukraine.

Tim Waterer, chief market analyst at KCM Trade, said, “The availability of new diesel supplies from Russia and steady oil flows from Saudi Arabia has provided some relief, but the market still appears more concerned about the risk of further attacks on ships or pipelines in the Gulf than reassured by the additional supplies.”

He added, “Until we see clearer signs of de-escalation, the path of least resistance still leans upward.”

Concerns over the fragility of energy infrastructure and shipping routes in the Gulf remain prominent after Iran-aligned Houthis targeted an airport in Riyadh earlier this week, and reports emerged of attacks on tankers near the Strait of Hormuz.