Oil dips after Trump announcements on Russian diesel, Ukraine energy ceasefire
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The attacks threaten to inject fresh volatility into a pivotal week for markets.
PHOTO: EPA
- Oil prices fell as hopes grew for a Russia-Ukraine energy ceasefire and more Russian diesel supplies after Donald Trump’s announcements.
- Brent and WTI dropped, while ICE gasoil fell 3%, but analysts said doubts over the ceasefire may limit further price falls.
- Middle East conflict and tanker attacks kept Brent above US$100, while Goldman Sachs raised its Brent forecast and warned of ongoing supply risks.
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LONDON – Oil prices slipped on Oct 12 on expectations of more Russian supplies after US President Donald Trump said Ukraine and Russia had agreed to halt attacks on each other’s energy facilities following a US diesel-supply deal with Moscow.
Brent crude futures fell 22 cents, or 0.2%, to US$104.50 a barrel by 0821 GMT (4.21pm Singapore time), while US West Texas Intermediate crude was at US$91.45 a barrel, down 40 cents, or 0.4%. Both benchmarks were down more than 1% earlier in the session.
Intercontinental Exchange gas oil futures fell 4.6% to $1,415 per tonne after Trump said on Oct 9 that Russia will immediately supply more than 300,000 tonnes (2.25 million barrels) of diesel to US and global markets, with more to come later.
“The immediate impact of the deal is questionable, as Russia’s refining capacity has been severely reduced,” PVM analyst Tamas Varga said.
“However, Moscow has partially lifted its ban on diesel exports, allowing 500,000 tonnes (around 3.7 million barrels) to be released onto the international market – equivalent to roughly one day of US consumption and around 13% of global demand.”
Trump also unexpectedly announced on Oct 11 that Ukraine and Russia had agreed to an energy ceasefire, but Ukrainian leader Volodymyr Zelensky said he was still waiting to see details of the energy ceasefire, while Russia did not comment.
The International Energy Agency’s Fatih Birol said all members should assess whether additional diesel releases are necessary and that countries which have not yet fully delivered pledged volumes should accelerate their remaining releases, prioritising diesel.
Crude supported by Middle East conflict
However, the Middle East conflict continued to support Brent crude at above US$100 a barrel.
The Iran-aligned Houthis claimed responsibility for an Oct 10 strike on Riyadh’s international airport that killed 13 people and wounded more than 300.
In addition, more attacks on tankers sailing through the Strait of Hormuz have been reported in October, threatening to dampen a recovery in Middle East crude exports seen in September.
Trump said on Oct 10 that the US was considering joining Saudi strikes on the Houthis in the conflict, a spillover from the wider war with Iran that the US and Israel launched in February.
A tanker was struck by a drone in the vicinity of Sohar anchorage in Oman, while another was damaged by an unknown projectile while transiting the Strait of Hormuz, the United Kingdom Maritime Trade Operations reported over the weekend.
Goldman Sachs raised its Brent crude price forecast for December to US$90 a barrel, up from US$85 previously, its analysts led by Daan Struyven said in a note.
“We maintain our base case that continued adaptation of Middle East supply will eventually reduce crude oil prices, while potential renewed escalation still poses significant net upside risk,” the analysts said, estimating a risk premium of just over US$20 a barrel.
“We forecast WTI (West Texas Intermediate) prices, which are unusually low versus Brent because of high US-Europe shipping costs, to average US$81 in December 2026 and US$73 in 2027,” they added.
In the Gulf of Mexico, energy majors Shell, Chevron and BP were seeking to redeploy personnel and restore production at their platforms after Hurricane Isaias made landfall early on Oct 10. REUTERS