By: Isuru Parakrama
October 13, World (LNW): Global oil prices retreated slightly on Tuesday after rising by almost US$2 a barrel in the previous session, as investors weighed the prospect of increased Russian diesel supplies against mounting concerns over attacks on energy infrastructure and shipping routes in the Middle East.
Brent crude futures fell by 61 cents, or 0.57 per cent, to US$106.04 a barrel by 0000 GMT, while US West Texas Intermediate (WTI) crude declined by 47 cents, or 0.5 per cent, to US$93.27. Brent had settled at US$106.65 on Monday, its highest closing level since 15 September.
Market sentiment was influenced by US President Donald Trump’s announcement that Russia had agreed to provide diesel to international markets. His administration has also temporarily eased US sanctions on Russian fuel, a move intended to increase supplies but one that has attracted criticism from lawmakers in both major American political parties. Critics argue that the decision appears to conflict with legislation restricting Russian energy imports until Moscow ends its war against Ukraine.
The possibility of additional fuel reaching the market has offered some relief amid concerns over tight supplies. However, analysts warn that the prospect of further disruption to oil shipments and critical infrastructure across the Gulf continues to underpin prices.
KCM Trade chief analyst Tim Waterer said the expected Russian supplies and more stable Saudi oil flows could ease pressure on fuel markets. Nevertheless, he noted that traders remained particularly concerned about the possibility of further attacks on vessels and pipelines in the region. Without clearer evidence that tensions are easing, upward pressure on prices could persist, he indicated.
Security concerns intensified following reported attacks by Iran-aligned Houthi forces on Riyadh’s international airport over the weekend, alongside reports of tanker attacks near the Strait of Hormuz. The incidents have raised fears that the recovery in Middle Eastern oil supplies observed in September could be undermined by renewed disruption.
The Strait of Hormuz is a crucial passage for international energy shipments, making any threat to maritime traffic there a significant concern for oil producers, traders and importing countries. Higher transport and insurance costs are adding to the pressure, with ministers from OPEC and participating non-OPEC countries reporting that these expenses have climbed to unprecedented levels, exceeding one-third of the value of the commodities being transported.
Meanwhile, OPEC has lowered its outlook for global oil demand growth this year. Secretary-General Haitham Al Ghais said on Monday that the organisation now expects demand to increase by 400,000 barrels per day, a substantial reduction from the 1.4 million barrels per day forecast at the beginning of the year.
With potential increases in fuel availability competing against persistent geopolitical risks, the oil market remains highly sensitive to developments affecting supply routes and production across the Middle East.
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