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- Oil prices are fixed in volatility as traders weigh the potential supply of Russian diesel against renewed Gulf risks.
- Trump’s energy ceasefire announcement faces doubts after fresh strikes in Ukraine, while damaged Russian refineries could limit the promised diesel supplies.
Oil traders are getting two completely opposite messages. One says more fuel might be on the way. The other says that supply from the Middle East is still in danger.
At first, prices dropped around 1.5% early in the session before climbing back. Today, oil prices are trading around $105 for Brent and $92 for WTI.
A Ceasefire Few Believe In
President Trump announced an “energy ceasefire” between Russia and Ukraine on Sunday and said both sides had agreed. Yesterday, that claim looked shaky.
Ukrainian President Volodymyr Zelenskyy had accused Russia of striking Ukrainian energy sites after the announcement. He said Ukraine was willing to halt attacks on Russian energy infrastructure if Moscow did the same. ⁽¹⁾
Naftogaz said Russian attacks on its gas-production facilities in Ukraine’s Kharkiv region overnight into Monday caused a fire and damaged critical equipment. ⁽²⁾
Neil Atkinson, a former head of oil at the International Energy Agency, was not surprised. “We’ve been here many times before,” he said, a reminder that ceasefires in this war have failed again and again. ⁽³⁾
Only 300,000 Tons Arrive Now Under Trump’s Diesel Deal
Last week, Trump announced that Russia would supply more than 4 million tons of diesel to global markets. That number might sound huge, but the details remained smaller. Only 300,000 tons would arrive now, with 500,000 more in November and 1 million immediately afterward. ⁽⁴⁾
Trump also stated that another 3 million tons of diesel would follow, but it will depend on the state of Russian refineries, whose output has been badly cut.
Europe wasn’t pleased much, with EU diplomat Kaja Kallas stating that now is not the time to ease pressure on Russia. Kallas said the EU had added nearly 1,600 people and entities to its sanctions list, the biggest single expansion since Russia’s full-scale invasion of Ukraine. ⁽⁵⁾
Strikes Renew Gulf Supply Concerns
Oil barely reacted to the strikes on Riyadh’s airport over the weekend, considering no refineries were hit. For oil markets, the bigger question is whether energy facilities become targets. ING’s Warren Patterson said prices would look very different if oil infrastructure were hit. ⁽⁶⁾
The stakes are higher now because Persian Gulf oil flows are at their highest since the US-Iran war began, so more supply is exposed if a strike does land on an energy site.
Two tankers were attacked over the weekend, one near Oman’s Sohar port and one in the Strait of Hormuz. Unlike airport strikes, these hit the route oil actually travels on, and they could stall the recovery in Gulf exports.
Iran’s offer to help start talks between Riyadh and the Houthis is the one sign tension may ease. If talks do start, that premium could shrink.
Hurricane Disrupts US Output as Goldman Raises Its Brent Forecast
Bad weather in the US piled on. Hurricane Isaias grew to Category 3 with 120 mph winds before hitting the US Gulf Coast early Saturday. Shell, Chevron and BP are now trying to bring crews back to their offshore platforms and restart output. ⁽⁷⁾
Forecasters are changing their views. Goldman Sachs lifted its December Brent forecast to $90 from $85, saying today’s price includes a risk premium of just over $20 a barrel.
That is the extra amount traders pay for fear of lost supply. OPEC trimmed its demand growth estimate for this year to 400,000 barrels a day from 1.4 million, but expects the missing demand to return in 2027. ⁽⁸⁾
