Oil Retreats Amid Turmoil / Brent Reaches $105
Oil prices fell by more than 1% in Tuesday trading on the global market.
Oil prices fell in global trading on Tuesday as traders weighed supply risks from attacks on Saudi Arabia against the possibility of an increase in diesel supplies from Russia.
The price of Brent crude oil futures decreased by 1 dollar and 30 cents, equivalent to 1.2%, to 105 dollars and 35 cents per barrel, and the price of West Texas Intermediate (WTI) crude oil decreased by 1 dollar and 25 cents, equivalent to 1.3%, to 92 dollars and 49 cents per barrel.
Both oil indices had risen nearly $2 per barrel in the previous trading session, and Brent oil prices had reached their highest level since September 15.
US President Donald Trump has announced that Russia has agreed to supply diesel to world markets and his administration has temporarily lifted US sanctions on Russian fuel.
More supply could help ease shortages in global fuel markets and ease some of the supply concerns that have recently supported crude oil prices.
However, analysts at ING Bank noted in a note that "there is considerable skepticism about an energy ceasefire between Russia and Ukraine, especially given reports that Russia has targeted Ukraine's energy targets since Trump announced it."
US lawmakers from both parties criticized Trump's deal with Putin as apparently violating a US law that bans Russian energy imports until the war between Russia and Ukraine ends.
Concerns about the vulnerability of energy infrastructure and shipping routes in the Persian Gulf remained the focus of attention; These concerns intensified after the Yemeni armed forces attacked the Riyadh International Airport and there were reports of attacks on oil tankers near the Strait of Hormuz.
The incidents threaten the recovery in Middle East oil supplies seen in September and have raised fears of further disruptions in one of the world's most important energy transit routes.
According to a Reuters report, Tim Waterer, senior analyst at KCM Trade, said: "The fresh supply of diesel from Russia and the more stable flow of Saudi oil have calmed the market to some extent, but the market is still more concerned about the risk of more attacks on ships or pipelines in the Persian Gulf than being encouraged by additional barrels." "Until we see clearer signs of de-escalation, prices will continue to trend upwards," he said.
BMI forecast: Brent oil will remain above $100 for months
BMI Chief Economist Cedric Shahab said on Monday that due to the continuing disagreement between the United States and Iran over a possible agreement, the price of crude oil will remain high in the coming months and the price of Brent oil will remain above $100 per barrel.
Shahab told CNBC's Squawkbox Asia that reaching an agreement "may still take several months." "For this reason, we believe that oil prices will remain at a high level — above $100 per barrel of crude oil — and this situation will continue to put pressure on global inflation, inflation expectations and monetary policies," the economist said.
According to this economist, the high price of oil creates a serious challenge for policy makers.
US President Donald Trump announced the establishment of an "energy ceasefire" between Russia and Ukraine late Sunday. These statements of the American president were announced after he announced an agreement for the immediate release of 300,000 tons of diesel fuel by Russia for the American and world markets, and this agreement is supposed to continue with the supply of another 500,000 tons in November and 1 million tons thereafter. Trump said Moscow would then deliver another 3 million tons of diesel based on the status of Russian refineries.
Trump is trying to rein in inflation ahead of November's midterm congressional elections — in which his Republican Party faces the risk of losing majorities in both houses.
According to the American Automobile Association (AAA), diesel prices reached a record high of $6.5276 per gallon in late September.