Oil falls as Russia diesel supply prospects counter Gulf supply risks

Oil prices eased on Tuesday, setting up their first daily loss in almost a week, as traders balanced security risks in Saudi Arabia against the prospect of extra Russian diesel, according to Business Recorder. Early trading showed Brent futures sliding $1.30, or 1.2 per cent, to $105.35 a barrel, while US WTI contracts shed $1.25 to $92.49. Both benchmarks had gained close to $2 in the prior session, with Brent closing at its loftiest level since September 15.

US President Donald Trump stated that Moscow had agreed to deliver diesel to world markets, and Washington briefly suspended sanctions on Russian fuel, which were intended to cut the revenue Russia earns from its war in Ukraine. Analysts at ING expressed doubt about the Russia-Ukraine energy truce, noting reports of Russian strikes on Ukrainian energy sites after the announcement. Lawmakers from both major US parties argued the deal with Putin seems to breach a law restricting Russian energy imports.

Gulf tensions also weighed after Iran-aligned Houthis struck Riyadh's international airport at the weekend, and tanker incidents were reported near the Strait of Hormuz. These developments threatened to derail the Middle East supply recovery seen in September. KCM Trade's chief analyst, Tim Waterer, said traders still fear attacks on vessels and pipelines across the Gulf more than they take comfort from additional barrels.