Oil prices declined on Tuesday as investors evaluated the potential influx of Russian energy into global markets, while escalations in the Saudi-Houthi conflict helped cap losses. Brent crude futures dropped 1.48% to settle at $105.05 per barrel, and U.S. West Texas Intermediate (WTI) futures fell 1.57% to $92.27.
President Donald Trump defended his administration’s recent decision to temporarily relax constraints on Russian diesel supplies on Monday, facing bipartisan criticism from lawmakers who argued the move could weaken sanctions related to Moscow’s war in Ukraine. In a statement posted on Truth Social, Trump asserted that the European Union had already spent billions on Russian energy imports and maintained that the agreement was beneficial for American interests. The deal permits Russia to supply diesel to both U.S. and international markets for a six-month period.
Despite the policy shift, Goldman Sachs indicated that additional Russian diesel is unlikely to substantially alleviate pressure on global fuel costs. The bank estimated that an increase of 800,000 metric tons—approximately 6 million barrels—would only reduce wholesale diesel prices on the U.S. Gulf Coast and in Europe by $1 to $2 per barrel.
In a Monday note, Goldman Sachs highlighted that Russian refinery outages had surged by 3 million barrels per day compared to the previous year, limiting Moscow’s capacity to boost production. The firm attributed ongoing global diesel shortages to seven consecutive months of declining output, with seaborne exports dropping by 1.4 million barrels per day, a 20% year-over-year decrease. U.S. diesel inventories have fallen 14% from a year ago, while visible stocks in China have dropped 11%.
Geopolitical tensions further complicated the market landscape after Iran-backed Houthi militants attacked King Khalid International Airport in Riyadh, Saudi Arabia, on Saturday. The strike resulted in 12 deaths and more than 300 injuries, marking a significant escalation in the regional conflict.
Bipartisan criticism on Monday and a temporary six-month window. This feels like a short-term bandage on a structural energy crisis that won’t go away anytime soon.
Wait, Russian refinery outages are up 3 million barrels daily? If supply can’t actually increase, how does relaxing sanctions do anything for diesel prices?
I cannot believe the Houthi attack hit an airport in Riyadh. The regional situation is spiraling out of control and prices reflect that fear.
Trump claims this helps US interests, but Goldman says the price drop will barely register. Seems like a lot of political theater for pennies.