Oil prices edged lower on Tuesday after gaining nearly $2 a barrel in the previous session, as markets weighed the prospect of additional Russian diesel supplies against continued risks to energy infrastructure and shipping routes in West Asia.
West Texas Intermediate (WTI) crude declined $0.90, or 0.96 per cent, to $92.84 a barrel, while Brent crude fell $1.01, or 0.95 per cent, to $105.60 a barrel. Brent futures had settled at $106.65 a barrel on Monday, their highest level since September 15.
As per Reuters, some pressure on oil markets eased after US President Donald Trump said Russia had agreed to supply diesel to global markets. The US administration temporarily relaxed sanctions on Russian fuel, opening the possibility of additional supplies entering a market that has faced tightness in recent weeks.
The decision has drawn opposition from lawmakers from both US political parties, who have questioned whether Trump's agreement with Russian President Vladimir Putin complies with US legislation restricting Russian energy imports while Moscow's war against Ukraine continues.
West Asia Supply Risks Persist
Supply concerns in West Asia continued to support crude prices after Iran-aligned Houthis struck Riyadh's international airport over the weekend. Attacks on tankers were also reported near the Strait of Hormuz, raising fresh concerns over the security of a critical global energy transit route.
The incidents threatened the recovery in West Asian energy supplies seen during September and renewed concerns over further disruptions in the region.
Ministers from OPEC and non-OPEC countries participating in the Declaration of Cooperation said shipping and insurance costs had risen to unprecedented levels, exceeding one-third of the value of the commodity. The increase has made the movement of crude oil and petroleum products more expensive and complicated.
OPEC has also cut its forecast for oil demand growth this year to 400,000 barrels per day from 1.4 million bpd at the beginning of the year, reflecting developments in the market during 2026.
Goldman Sachs, meanwhile, expects Brent crude could fall into the $60s per barrel in 2027 if oil production in the Persian Gulf recovers faster than anticipated. Such a scenario would require average Gulf oil output in 2027 to rise by 1 million bpd above February 2026 levels.
A renewed escalation in West Asia could produce the opposite outcome, keeping the geopolitical risk premium elevated and pushing crude prices significantly higher.
As per Reuters, continued adjustments in West Asian oil supplies are expected to eventually put downward pressure on crude prices, although renewed escalation in the region remains a significant upside risk.
The West Asia conflict has disrupted energy supplies for more than seven months, contributing to volatility and elevated prices across global oil markets. Despite Brent remaining above $100 a barrel, current prices are still well below the roughly $126 per barrel reached earlier in the crisis.