Solid Gold Berjangka - Crude oil prices retreated on Tuesday (Oct 13) after previously recording a gain of nearly US$2 per barrel. Brent fell 1.52% to US$105.03 per barrel, while WTI weakened 1.77% to US$92.08. The market is currently weighing two primary forces: the risk of supply disruptions stemming from Middle East conflicts and the potential for additional diesel supplies from Russia.
Downward pressure on prices emerged after US President Donald Trump stated that Russia would increase diesel supplies to the global market. The US government has also temporarily eased sanctions on Russian fuel. If the additional supply materializes, it could help alleviate tightness in the fuel market and reduce the risk premium that had previously driven oil prices up.
However, Russia's ability to meet the promised supply volumes remains in question. Disruptions within Russia's refining sector have led the market to doubt whether these supply targets can be achieved. This implies that while additional supply has the potential to dampen prices, the impact may not be felt immediately.
On the other hand, geopolitical risks continue to support prices. Attacks on Riyadh by the Iran-backed Houthi group, along with reports of attacks on tankers near the Strait of Hormuz, have heightened concerns regarding the security of oil distribution routes. Surging shipping and insurance costs could also hinder the smooth distribution of crude oil and energy products from the region.
Oil is currently caught in a tug-of-war between additional supply and geopolitical risks. If Russian supplies do increase and global demand slows, downward pressure could persist. However, as long as attacks on infrastructure and tankers continue, the risk premium will keep oil prices elevated. With Brent still above US$100, the market needs to watch closely whether this correction is merely temporary or the start of a more prolonged decline.