Oil dips as Russia flags diesel exports above Trump deal

Oil prices slipped early Tuesday, Oct. 13, after Russian Deputy Prime Minister Alexander Novak said late Monday that Russia could bring diesel exports back above the levels set out in a supply deal announced by U.S. President Donald Trump. Brent crude was down 0.9% to about $105.72 a barrel by 00:18 GMT, and West Texas Intermediate fell 0.9% to about $92.92.investing

The drop was small. Both benchmarks had gained more than 1% on Monday, and Brent settled that day at $106.65, its highest since Sept. 15. Prices stayed close to recent highs as traders weighed the chance of more Russian fuel against attacks in the Gulf and doubts about a Russia-Ukraine "energy ceasefire" that Trump had announced.reuters+1

Sanctions relief and criticism in Washington

Trump said Friday that Russia had agreed to supply diesel to world markets, and his administration temporarily lifted U.S. sanctions on Russian fuel. Those sanctions were meant to cut Moscow's revenue for its war on Ukraine. More Russian fuel could ease tight global supplies, which have been squeezed by disruptions in the Middle East and at refineries.reuters+1

Lawmakers from both parties objected. They said Trump's agreement with Russian President Vladimir Putin appears to violate a U.S. law that bars imports of Russian energy until Moscow ends its aggression against Ukraine, Reuters reported. Trump also announced the energy ceasefire unexpectedly, and it was not immediately clear whether Moscow and Kyiv had agreed to it.investing+1

Gulf risks keep prices high

Supply worries remained after Iran-backed Houthi forces in Yemen struck Riyadh's international airport and other civilian and energy sites in Saudi Arabia over the weekend. Tanker attacks were also reported near the Strait of Hormuz. Trump said Washington may help Saudi Arabia against the Houthis. Shipping through the strait had briefly improved in September, but renewed Iranian attacks have cut traffic and oil flows again this month.reuters+1

OPEC and non-OPEC ministers in the Declaration of Cooperation said shipping and insurance costs have reached unprecedented levels, more than one-third of the value of the cargo. Novak told Russian television that freight and insurance costs have risen five- to tenfold on some routes, and that ministers meeting in Riyadh agreed these costs accounted for most of the rise in oil prices, according to Russia's state news agency TASS. OPEC Secretary General Haitham Al Ghais said Monday the group has cut its 2026 demand growth forecast to 400,000 barrels per day, down from 1.4 million at the start of the year.tass+1

"Fresh diesel supply from Russia and steadier Saudi flows are offering some relief, yet the market still looks more worried about the risk of further hits to ships or pipelines in the Gulf than it is reassured by extra barrels," said Tim Waterer, chief analyst at KCM Trade. "Until we see clearer signs of de-escalation, the path of least resistance still leans higher."reuters