Brent falls below $105 despite rising tensions in the Gulf

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Brent falls below $105

Highlights

Brent falls 1.88%, WTI drops 1.60%.
Russian diesel may ease supply.
Gulf attacks threaten oil flows.

December Brent crude futures traded at $104.64 a barrel, down 1.88%, while November West Texas Intermediate futures stood at $92.24, down 1.60%, according to the latest market figures provided. The reversal came after Brent reached its highest closing level since September 15, with traders weighing possible Russian fuel deliveries against security threats in the Persian Gulf, Reuters reports.

Russian diesel plan raises supply questions

President Donald Trump said Russia had agreed to increase diesel supplies to international markets, while Washington temporarily eased sanctions affecting Russian fuel. The move could provide relief to buyers facing limited availability and elevated transportation costs.

Russia is aiming to supply between 3 million and 3.5 million metric tons of diesel monthly by the end of 2026. However, damage and operational difficulties at Russian refineries have raised doubts about whether that volume can be delivered.

The agreement has also drawn objections from U.S. lawmakers in both parties, who questioned its compatibility with restrictions on Russian energy trade imposed over the war in Ukraine.

For oil traders, the immediate question is whether additional diesel exports can ease pressure on fuel markets without being offset by disruptions elsewhere.

Gulf attacks keep supply risks elevated

Security concerns remained acute after Iran-aligned Houthi forces attacked Riyadh's international airport over the weekend. Separate incidents involving commercial tankers near the Strait of Hormuz reinforced fears about the safety of a major oil-export route.

Shipping and insurance expenses have climbed to more than one-third of the value of transported oil and petroleum products, according to ministers participating in the OPEC and non-OPEC cooperation framework.

Those costs are complicating deliveries even where production remains available, limiting the potential benefit of additional supply from Russia.

Weaker demand outlook complicates oil recovery

Supply disruptions are unfolding against a less encouraging demand outlook. OPEC has reduced its forecast for global oil demand growth in 2026 to 400,000 barrels per day, compared with an estimate of 1.4 million barrels per day at the beginning of the year.

The downgrade suggests that weaker consumption could limit further price gains, even if geopolitical tensions keep supply risks elevated.

The next major uncertainty is whether Washington and Tehran move toward negotiations or renewed confrontation after the U.S. midterm elections in November.For energy markets, the combination is difficult to price. Russian diesel exports could ease immediate shortages, but Gulf shipping disruptions remain capable of raising costs across the supply chain. Tuesday's decline shows how quickly expectations can shift when new supply becomes possible, even as the underlying geopolitical risks remain unresolved.

We also reported Hormuz shipping attacks disrupt Gulf oil flows and lift tanker earnings.

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