Oil prices dipped on Tuesday after a nearly $2 rise in the previous session, as traders weighed supply risks from attacks on Saudi Arabia against potential additional diesel supplies from Russia. Brent crude futures fell 61 cents, or 0.57%, to $106.04 a barrel, while US West Texas Intermediate crude futures declined 47 cents, or 0.5%, to $93.27 a barrel.
US President Donald Trump announced that Russia had agreed to supply diesel to global markets, and the US temporarily lifted sanctions on Russian fuel to support this effort. The move could ease global fuel market tightness, though lawmakers from both parties criticized the agreement, arguing it violates US law barring Russian energy imports until Moscow ends its war on Ukraine.
Despite the potential for increased diesel supply, concerns over Gulf energy infrastructure and shipping lanes remain high. Recent attacks by Iran-aligned Houthis on Riyadh's international airport and tanker incidents near the Strait of Hormuz have heightened fears of further disruptions in a critical energy transit route. OPEC and non-OPEC ministers noted that shipping and insurance costs have surged to unprecedented levels, hindering efficient crude oil movement.
OPEC has revised its oil demand growth forecast for this year downward to 400,000 barrels per day from 1.4 million bpd at the start of the year. Tim Waterer, KCM Trade chief analyst, noted that while fresh diesel supply from Russia and steadier Saudi flows offer some relief, the market remains more concerned about potential disruptions than reassured by extra barrels. He added that until clearer signs of de-escalation emerge, the path of least resistance for oil prices still leans higher.