Oil prices fell on Tuesday after Russia said its diesel exports may exceed volumes announced under a supply deal with the U.S. Traders still weighed Houthi attacks on Saudi Arabia and risks to Gulf oil flows.
Brent crude futures fell 1.5% to $105.09 a barrel by 04:32 ET, while U.S. West Texas Intermediate futures retreated 1.7% to $92.11 a barrel. The drop followed Russia's claim that it can ship more diesel than the U.S. deal outlined.
Both benchmarks had climbed nearly $2 a barrel in the previous session, with Brent settling at its highest since September 15.
Russia says diesel exports could top the U.S. deal
Russian Deputy Prime Minister Alexander Novak said late Monday that Russia will be able to return diesel exports to levels above those outlined by U.S. President Donald Trump. On Friday, Trump said Russia had agreed to supply diesel globally and that his administration had temporarily lifted sanctions on Russian fuel.
Additional supplies could help alleviate tightness in global fuel markets, according to Reuters. PVM Oil Associate Analyst Tamas Varga, however, said Russia's promise of 3-3.5 million tons per month by the end of the year is unlikely to be accomplished, given the dire state of the country's refining sector.
Houthi attacks keep Gulf supply in focus
According to ING analysts: "the market is more concerned over recent developments in the Middle East", including Houthi attacks on Saudi Arabia.
Iran-aligned Houthis struck Riyadh's international airport over the weekend, and tanker attacks were reported near the Strait of Hormuz. Varga said the lack of de-escalation in Eastern Europe and the Middle East kept the risk premium elevated.
OPEC, meanwhile, revised down its oil demand growth forecast for this year to 400,000 barrels per day from 1.4 million bpd at the start of the year, Secretary General Haitham Al Ghais said on Monday.
Sources: Investing.com, Reuters via Investing.com
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