Key Points
- Brent and US crude retreat after three sessions of gains
- Additional Russian diesel supplies ease concerns over fuel shortages
- Houthi attacks and tanker threats keep Gulf supply risks elevated
ISLAMABAD: Oil prices fell on Tuesday after three sessions of gains, as expectations of additional Russian diesel supplies eased concerns over fuel shortages.
However, escalating security risks in the Middle East continued to threaten energy shipments. Brent crude slipped towards $105 a barrel and US West Texas Intermediate (WTI) fell below $93, according to Bloomberg.
Brent crude for December delivery declined 1.5 per cent to $105.02 a barrel at 11:08 am Singapore time. WTI traded near $92.
The benchmarks had gained more than 6 per cent over the previous three sessions as attacks on Saudi Arabia and threats to shipping near the Strait of Hormuz raised concerns about supplies.
The figures reflect prices at different points in the trading session, rather than final settlement prices.
Qatar News Agency reported that Brent had settled at $106.65 a barrel on Monday, up $1.93, or 1.8 per cent, while WTI closed at $93.74, gaining $1.89, or 2 per cent. Both benchmarks reached their highest settlement levels on yesterday since mid-September.
READ ALSO: Oil Prices Rebound Above $105 as Middle East Risks Persist
The latest decline followed a rally driven by concerns that the expanding Iran war could delay the recovery of oil supplies. The war began on February 28 and has repeatedly disrupted energy markets through threats to shipping, infrastructure and regional security.
Russian diesel supplies offer some relief
US President Donald Trump’s decision to allow additional Russian diesel exports offered another potential source of relief for tight fuel markets.
Bloomberg reported that diesel prices in New York fell for a third consecutive session as traders assessed the prospect of additional supplies reaching international buyers.
However, the expected export increases may not immediately ease shortages. Russian refining capacity and continuing attacks on energy infrastructure complicate the outlook, while deliveries may take time to reach consumers.
Diesel is particularly important to freight transport, agriculture, construction and industrial production.
Its price affects the cost of moving goods and operating heavy machinery, meaning shortages can keep inflationary pressure high even when crude prices decline.
The market is therefore responding to two opposing developments: the prospect of additional fuel supplies from Russia and the possibility of further disruptions to oil production and shipping in the Middle East.
Saudi attacks heighten oil supply concerns
Security risks remained central to the market outlook after renewed attacks by Yemen’s Houthi militia on Saudi Arabia, including strikes on Riyadh’s King Khalid International Airport.
Tanker incidents near the Strait of Hormuz have added to concerns about the safety of energy shipments.
The Strait of Hormuz connects the Gulf’s major oil-producing countries with international markets and is one of the world’s most important energy shipping routes.
A prolonged interruption could restrict exports, increase freight and insurance costs, and force buyers to seek alternative supplies.
Saudi Arabia is also seeking to reduce its dependence on the strait by expanding pipeline capacity to export destinations outside the Gulf. Market reports highlighted plans to increase the capacity of the kingdom’s pipeline network, although such measures will not offset immediate shipping risks.
Oman crude price drops sharply
Oman’s official price for crude oil scheduled for December delivery fell by $4.84 to $105.40 a barrel on Tuesday, compared to $110.24 on Monday, according to the Oman News Agency.
The decline indicated another downward adjustment in regional crude quotations, although official Oman pricing and international benchmark prices are assessed differently.
For oil-importing countries such as Pakistan, sustained fall in crude prices could reduce the cost of energy imports.
However, domestic petrol and diesel prices also depend on refined-product quotations, refining margins, freight, insurance, the exchange rate and government taxes and levies.
The immediate outlook depends on whether additional Russian diesel supplies reach international markets and whether security conditions around Saudi Arabia and the Strait of Hormuz deteriorate further.
Tuesday’s decline offered some relief after the recent rally, but persistent geopolitical risks continue to leave oil and refined-fuel markets vulnerable to renewed price swings.
