Oil prices dropped on Tuesday as traders evaluated the potential impact of Russian diesel supply entering global markets, while tensions from the Saudi-Houthi conflict tempered the declines. Brent crude futures fell 1.48% to $105.05 a barrel, and U.S. West Texas Intermediate futures declined 1.57% to $92.27.
President Donald Trump defended his administration’s decision to temporarily ease restrictions on Russian diesel supplies, despite criticism from U.S. lawmakers. In a Truth Social post, Trump argued that the European Union had spent billions on Russian energy imports and insisted the move was the right decision for Americans. The agreement allows Russia to supply diesel to U.S. and global markets for six months.
Goldman Sachs warned that additional Russian diesel supplies would not significantly ease global fuel price pressures. The bank estimated that an increase of 800,000 metric tons, or roughly 6 million barrels, would only lower wholesale diesel prices in the U.S. Gulf Coast and Europe by $1 to $2 a barrel. The note also highlighted that Russian refinery outages jumped by 3 million barrels per day from a year earlier, limiting production capacity.
Global diesel markets remain under strain, with U.S. inventories down 14% and visible stocks in China falling 11% year over year. The shortages stem from seven consecutive months of declining global diesel production, with seaborne exports falling by 1.4 million barrels per day, or 20%. Meanwhile, Iran-backed Houthi militants in Yemen attacked King Khalid International Airport in Riyadh, killing 12 people and injuring over 300, marking a major escalation in the conflict.