Oil prices fell Tuesday as the prospect of extra Russian diesel eased worries over global fuel supplies, though attacks on Saudi Arabia and shipping in the Gulf kept a floor under the market.
Brent crude futures dropped between 1% and 1.5% to about $105 a barrel, after rising nearly $2 on Monday to settle at $106.65, its highest since Sept. 15. U.S. West Texas Intermediate fell about 1.3% to near $92.50.
Why oil prices fall on Russian diesel news
President Donald Trump said Russia has agreed to supply diesel to global markets, and his administration has temporarily eased U.S. sanctions on Russian fuel. He said more than 300,000 metric tons would ship immediately, with another 500,000 tons in November and 1 million tons after that.
Trump also announced Sunday that Russia and Ukraine had agreed to stop attacking each other’s energy infrastructure. On Monday he defended easing the sanctions despite bipartisan criticism in Washington.
Goldman Sachs says the relief may be quite small. It estimates that an extra 800,000 metric tons, roughly 6 million barrels, would lower wholesale diesel prices on the U.S. Gulf Coast and in Europe by only $1 to $2 a barrel.
The bank blamed the shortage on seven straight months of falling global diesel output. Seaborne diesel exports are down 1.4 million barrels a day, or 20%, from a year ago.
Russia could raise diesel exports further, to as much as 3 million to 3.5 million metric tons a month by year end, one market report said, though that would depend on how long Washington keeps the sanctions suspended.
The sanctions waiver is temporary, which is why traders are treating the extra diesel as relief, not a lasting fix.
Gulf risks keep prices high
Houthi missile and drone attacks on Saudi Arabia and reported tanker attacks near the Strait of Hormuz kept traders cautious. Tim Waterer, chief market analyst at KCM Trade, said the market is still “more worried about the risk of further hits” to ships or pipelines than it is reassured by extra barrels.
OPEC added to the gloom on demand growth. It cut its 2026 oil demand growth forecast to 400,000 barrels a day from 1.4 million, and said shipping and insurance costs now exceed a third of the value of commodities moved.
Iran’s top negotiator has said the strait will stay closed until Washington meets Tehran’s conditions, and talks have produced no deal.
What it means for fuel buyers
Diesel is the pressure point for consumers and businesses. Last week, Nigeria’s Dangote refinery cut its diesel price to N1,700 a liter, but crude near $105 a barrel could limit further cuts.
Brent traded near $101 last week, and has since climbed despite an emergency stock release agreed by the Group of Seven. Reserves bought time, but they did not reopen the Strait of Hormuz.
Oil prices fall when diesel supply improves and rise when ships or pipelines are hit. With Brent near $105, the market is likely to keep swinging between the two until the Gulf calms.
