Oil edges lower as Russian diesel prospects offset Gulf supply risks

Oil futures slipped on October 12 as traders weighed the possibility of more diesel from Russia against supply risks following attacks in Saudi Arabia. At 12:00 a.m. GMT, Brent was down 61 cents, or 0.57%, at $106.04 a barrel. US West Texas Intermediate declined 47 cents, or 0.5%, to $93.27 a barrel.

The decline followed a gain of nearly $2 a barrel in the preceding session. Brent's Monday settlement of $106.65 a barrel was its highest since September 15.

US President Donald Trump said Russia had agreed to provide diesel for global markets. His administration temporarily removed US sanctions on Russian fuel. Lawmakers from both parties said Trump's agreement with Putin appeared to breach a US law prohibiting Russian energy imports until Moscow ends its aggression against Ukraine.

Gulf supply concerns persisted after Iran-aligned Houthis attacked Riyadh's international airport over the weekend and tanker attacks were reported near the Strait of Hormuz. KCM Trade chief analyst Tim Waterer said the risk of further attacks on ships or pipelines remained a greater concern for the market than the reassurance offered by additional Russian diesel and steadier Saudi flows.

OPEC and partner-country ministers said shipping and insurance expenses had reached unprecedented levels exceeding one-third of the commodity's value, obstructing oil and fuel transport. OPEC Secretary General Haitham Al Ghais also said the organization had lowered its forecast for annual oil demand growth to 400,000 barrels per day, compared with 1.4 million bpd at the year's start.