Oil Prices Fall as Russia Diesel Deal Eases Supply Concerns

Crude oil prices edged lower in international trading on Monday, October 12, 2026, after US President Donald Trump announced plans for additional Russian diesel supplies and an agreement between Ukraine and Russia to suspend attacks on energy infrastructure. However, continued Middle East hostilities, shipping disruptions and declining fuel inventories maintained pressure on global energy markets.

Brent crude futures fell 22 cents, or 0.2%, to $104.50 a barrel by 0821 GMT, while US West Texas Intermediate (WTI) dropped 40 cents, or 0.4%, to $91.45. Both benchmarks had declined by more than 1% earlier in the session, according to Reuters.

ICE gasoil futures, a key European diesel benchmark, fell 4.6% to $1,415 per metric ton. The decline followed Trump's announcement on Friday that Russia would immediately provide more than 300,000 metric tons, equivalent to 2.25 million barrels, of diesel to US and global markets, with additional shipments expected later.

Tamas Varga, an analyst at PVM, questioned the immediate impact of the supply agreement because Russian refining capacity has been significantly reduced. He also noted that Moscow had partially relaxed its diesel export restrictions, allowing 500,000 tonnes, or approximately 3.7 million barrels, to enter international markets. That volume represents roughly one day of US consumption and about 13% of global demand.

Trump also announced on Sunday that Ukraine and Russia had agreed to halt attacks on each other's energy facilities. Ukrainian President Volodymyr Zelenskiy said he was awaiting details of the arrangement, while Russia had not commented on the announcement, according to Reuters.

International Energy Agency Executive Director Fatih Birol urged member countries to evaluate whether additional diesel supplies should be released. He also called on countries that have not fulfilled their previously pledged releases to accelerate deliveries, prioritizing diesel.

Despite the potential supply relief, geopolitical risks continued to support Brent prices above $100 a barrel. Reuters reported that Iran-aligned Houthi forces claimed responsibility for a Saturday attack on Riyadh's international airport that killed 13 people and injured more than 300.

Maritime security also remained a concern. The United Kingdom Maritime Trade Operations reported that a tanker had been struck by a drone near Sohar, Oman, while another vessel sustained damage while transiting the Strait of Hormuz. Further attacks on tankers during October threatened the recovery in Middle Eastern crude exports recorded in September.

A separate CNN report published on October 9 described how shipping expenses, insurance premiums and security risks continued to drive up the cost of delivering oil, even as traffic through the Strait of Hormuz recovered toward prewar levels.

According to Clarksons, the daily cost of chartering a very large crude carrier to transport oil from the Persian Gulf to China had climbed to $1.6 million, compared with $230,000 shortly before the Iran war began and $65,000 a year earlier.

Tom Kloza, chief energy adviser at Gulf Oil, described the expense as extraordinary. The CNN report also said that payments to sailors undertaking dangerous voyages had reached as much as $25,000 per trip, while oil producers were paying between $30 million and $40 million for round-trip voyages through the Strait of Hormuz, according to The Wall Street Journal.

Kloza estimated that transporting crude from the Persian Gulf had increased from approximately $2 per barrel to about $33. The CNN report put the physical-market price of Dated Brent at $135.74 a barrel as of Thursday, substantially above Brent futures trading near $100 at the time.

Jan Stuart, global energy strategist at Piper Sandler, said the continuing conflicts were preventing a return to normal energy-market conditions.

"The wars have not been resolved. There is no peace. The energy system is still constricted," Stuart said.

Russia's damaged refineries and export restrictions have further tightened diesel availability, while China has also limited fuel exports to protect its domestic supply, according to CNN. US refineries have been operating at high production levels, although some facilities were beginning routine seasonal maintenance.

Stuart also warned that shrinking inventories were reducing the world's ability to absorb further supply disruptions.

"We are running on very, very low inventories. We don't have buffers anymore," Stuart said.

Against this backdrop, Goldman Sachs raised its December Brent forecast to $90 a barrel from $85, citing an estimated risk premium of slightly more than $20 per barrel. The bank projected WTI would average $81 in December 2026 and $73 in 2027, attributing the unusually wide Brent-WTI price gap partly to high shipping costs between the United States and Europe.