Oil prices edged lower on Tuesday after rising by nearly $2 a barrel in the previous session, as traders weighed the risks to supplies from attacks on Saudi Arabia against the prospect of additional diesel supplies from Russia.West Texas Intermediate (WTI) crude was trading at $92.84 a barrel, down $0.90, or 0.96%, while Brent crude fell $1.01, or 0.95%, to $105.60 a barrel. This comes after Brent futures had settled at $106.65 a barrel on Monday, their highest level since September 15.Oil markets have found some relief after US President Donald Trump said that Russia has agreed to supply diesel to global markets. The US administation temporarily lifted US sanctions on Russian fuel, which were designed to deprive Moscow of revenue for its war on Ukraine.These additional supplies could ease tightness in global fuel markets and temper some of the supply concerns that have supported crude prices in recent weeks.However, lawmakers from both parties in the US complained that Trump’s agreement with Russian President Vladimir Putin appeared to violate US law barring imports of Russian energy until Moscow ends its aggression against Ukraine.Concerns about the vulnerability of energy infrastructure and shipping lanes in the Gulf continued to weigh on market sentiment after Iran-aligned Houthis struck Riyadh’s international airport over the weekend. Attacks on tankers were also reported near the Strait of Hormuz.The incidents threatened to derail the recovery in Middle East supplies seen in September, reinforcing concerns about further disruptions along one of the world’s most important energy transit routes.Ministers of OPEC and non-OPEC Participating Countries in the Declaration of Cooperation said shipping and insurance costs had surged to unprecedented levels, exceeding one-third of the commodity value. The higher costs were impeding the efficient movement of crude oil and petroleum products.OPEC has also lowered its forecast for oil demand growth this year to 400,000 barrels per day (bpd), from 1.4 million bpd at the start of the year, reflecting developments throughout the year, the organisation’s secretary general, Haitham Al Ghais, said on Monday, as cited by Reuters.Meanwhile, Goldman Sachs said that brent crude prices could fall to the $60s per barrel in 2027 if oil production in the Persian Gulf recovers faster than expected. However, the investment bank warned that further escalation in the region could push prices significantly higher.The bank said Brent could decline to the $60s if average oil output in the Gulf in 2027 rises by 1 million bpd above February 2026 levels.“A faster recovery in Mideast output and/or a faster erosion of the risk premium are the most likely potential triggers of price downside,” Goldman Sachs said.Continued adjustments in Middle East oil supplies would eventually bring crude prices down but renewed escalation in the region remained a significant risk that could push prices higher.Now, the Middle East conflict has continued disrupt energy supplies for over seven months now, rattling oil markets and pushing prices high. However, even with the ongoing tensions, the spike is far lower than the $126 per barrel seen earlier during the crisis.
