Oil prices declined on Monday following expectations of increased Russian supplies, after US President Donald Trump announced that Ukraine and Russia had agreed to halt attacks on each other’s energy infrastructure. The move came shortly after Washington finalized an agreement with Moscow for diesel deliveries.
Market Reaction and Pricing
Futures for Brent crude fell by $1.54, or 1.47 percent, to $103.18 per barrel by 01:54 GMT. West Texas Intermediate (WTI) crude also dropped, settling at $90.31 per barrel, a decrease of $1.54 or 1.68 percent. The decline reflects market relief regarding potential supply chain disruptions in the Black Sea region.
Diesel Supply Commitments
Trump stated on Friday that Russia would immediately supply more than 300,000 tons (2.25 million barrels) of diesel to US and global markets. He added that Russia would provide an additional 500,000 tons in November, followed by another one million tons “immediately thereafter.” The International Energy Agency (IEA) noted that global daily diesel consumption is expected to reach approximately 29 million barrels.
Conflicting Signals on Ceasefire
While Trump announced the energy ceasefire unexpectedly on Sunday, Ukrainian President Volodymyr Zelensky said he was still awaiting details regarding the truce. Russia did not immediately comment on the announcement. Tim Waterer, chief analyst at KCM Trade, noted that these announcements eased some immediate pressure on supplies. However, he cautioned that questions remain regarding the validity and longevity of such a ceasefire. Without clearer evidence that it will hold, the scope of price declines is likely to remain limited.
Geopolitical Tensions Persist
Despite the positive news from Eastern Europe, ongoing conflicts in the Middle East continued to support Brent crude above the $100 mark. The Houthis claimed responsibility for a Saturday attack on Riyadh International Airport, which killed 13 people and injured over 300. Saudi authorities reported injuries from a new attack on the airport on Sunday. Trump indicated on Saturday that the US is considering joining Saudi strikes against the Houthis, an extension of the broader conflict with Iran initiated by the US and Israel in February.
Hormuz Strait Vulnerabilities
Further threats to stability emerged from reports of additional attacks on oil tankers passing through the Strait of Hormuz this month, jeopardizing the recovery of Middle East crude exports seen in September. The UK Maritime Trade Operations agency reported early this week that an oil tanker was attacked by a drone near Marsa in Oman, while another vessel sustained damage from an unknown projectile while transiting the Strait of Hormuz.
