Brent crude oil futures fell by $1.30, or 1.2%, to $105.35 per barrel. The price of West Texas Intermediate (WTI) crude oil in the U.S. also dropped by $1.25, or 1.3%, to $92.49 per barrel.
New Agreement Between the U.S. and Russia
Donald Trump, the President of the United States, announced that Russia has agreed to supply diesel for global markets, and his administration has temporarily lifted U.S. sanctions against Russian fuel. This move could help alleviate shortages in global fuel markets and somewhat reduce concerns regarding supply, which had recently supported crude oil prices.
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However, analysts at ING noted in a memo that there are significant doubts about the energy ceasefire between Russia and Ukraine. This is especially true given reports that Russia has targeted Ukrainian energy facilities since Trump announced the news. Lawmakers from both parties in the U.S. have criticized Trump's agreement with Putin, deeming it apparently a violation of U.S. law that bans imports of Russian energy until the war between Russia and Ukraine ceases.
Concerns About Energy Security in the Persian Gulf
Concerns about the vulnerability of energy infrastructure and shipping routes in the Persian Gulf remain a focal point. These concerns have intensified following attacks by Yemeni armed forces on Riyadh International Airport and reports of attacks on tankers near the Strait of Hormuz. These incidents threaten the recovery of oil supply in the Middle East and increase fears of further disruptions in one of the world's most important energy transit routes.
Tim Waterer, a senior analyst at KCM Trade, stated: "The fresh supply of diesel from Russia and a more stable flow of oil from Saudi Arabia have somewhat calmed the market, but the market remains concerned about the risk of further attacks on ships or pipelines in the Persian Gulf." He also added: "As long as we do not see clearer signs of de-escalation, the trend of prices is likely to remain upward."
Future Oil Price Predictions
Cedric Shabab, a senior economist at BMI, stated that given the ongoing disagreements between the U.S. and Iran over a potential agreement, crude oil prices are likely to remain high in the coming months, with Brent oil prices expected to stay above $100 per barrel. He emphasized: "For this reason, we believe that oil prices will remain at a high level, and this situation will exert pressure on global inflation and monetary policies."
Donald Trump announced that an agreement has been made for the immediate release of 300,000 tons of diesel by Russia for U.S. and global markets. This agreement is set to continue with an additional supply of 500,000 tons in November and one million tons thereafter. Trump is trying to curb inflation before the midterm elections in Congress in November.
According to the American Automobile Association (AAA), diesel prices reached a record high of $6.5276 per gallon in late September.
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