Crude Oil Price Falls Towards $105 As Russian Supply Hopes Offset Middle East Disruption Risks

Crude oil prices fell on Tuesday, October 13, giving up some of the previous session's gains as traders weighed the possibility of additional Russian diesel supplies against growing risks to oil flows from the Middle East.

Brent crude fell $1.30, or 1.2%, to $105.35 a barrel in early trade, while US West Texas Intermediate crude declined $1.25, or 1.3%, to $92.49. Brent had settled at $106.65 on Monday, up 1.8% and at its highest closing level since September 15, after fresh attacks in the Middle East raised concerns over another disruption to supplies.

The pullback came after US President Donald Trump said Russia had agreed to supply diesel to global markets, while the US temporarily eased sanctions on Russian fuel. The prospect of additional supplies offered some relief to a market that has been dealing with tight fuel availability, although uncertainty remains over how quickly those barrels can reach the market.

Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates at Kotak Neo, said crude and diesel are currently reflecting two different sides of the oil market.

“Crude and diesel are telling different stories. Crude is pricing the risk of further supply disruption; diesel is pricing the prospect of additional barrels from Russia and emergency reserves. That divergence captures the market’s central tension: immediate physical tightness versus promised supply relief.”

Crude Oil Falls But Middle East Supply Risks Remain

The prospect of more Russian fuel has taken some heat out of oil prices, but the physical crude market remains tight as risks around the Middle East continue to build.

Houthi missiles and drones targeted Riyadh's main airport and other Saudi sites over the weekend, while tanker incidents were also reported near the Strait of Hormuz. The developments have renewed concerns over supplies moving through one of the world's most important oil transit routes.

Banerjee said six vessels were reportedly hit near the Strait of Hormuz on Saturday, including one anchored off Sohar in Oman, while naval tracking showed daily transits at around 29 compared with about 138 before the war.

“The physical market reflects that stress. Supertanker rates on the Gulf-to-China route remain near $1.4 million a day. Dated Brent- the price of physical cargoes loading in the near term- is still assessed above $130 a barrel, more than $20 above futures,” Banerjee said.

The gap between physical cargo prices and Brent futures shows that near-term barrels remain expensive despite Tuesday's decline in benchmark futures.

Russia is another part of the equation. Expectations of additional diesel supplies have helped cool prices, but Moscow has not confirmed the Russia-Ukraine energy ceasefire, while Kyiv has said the agreement has already been breached.

“Until the agreement translates into sustained flows, the anticipated relief remains uncertain,” Banerjee said.

The International Energy Agency is also due to meet on Wednesday and Thursday, with possible further releases of emergency crude and diesel stocks among the issues in focus.

Where Could Brent Crude Head Next?

After Monday's rise, Brent has eased back towards $105 and remains within the wider range seen over recent sessions. Banerjee sees the current movement as consolidation rather than a change in the broader trend.

“Brent has eased towards $105 this morning and continues to trade within the $98–108 zone. We read this as bullish consolidation. A close above the $108–110 resistance band would open the way towards $120. A close below $96 would invalidate our bullish view and signal scope for a deeper decline.”

For now, oil is caught between the prospect of more supply and the risk that further attacks could disrupt existing flows. Additional Russian diesel exports and any release from emergency reserves could ease pressure, while another escalation around Saudi Arabia or the Strait of Hormuz could quickly bring supply concerns back to the fore.

That leaves the $108–110 area as an important resistance zone for Brent, while a sustained move below $96 would change the current bullish view, according to Banerjee.

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