By: Fatima Younes
Crude oil prices witnessed a slight decline at the beginning of this week, driven by market expectations of increased diesel fuel supplies following the agreement reached between US President Donald Trump and Russian President Vladimir Putin. Despite this decline, oil prices remain at high levels compared to last week, with Brent crude reaching $107.84 per barrel, while West Texas Intermediate recorded $100.29 per barrel.
Agreement Details and Sanctions Relief
This shift comes after the US President signed an executive order last Friday, lifting sanctions on the Russian energy sector, which had been imposed recently under the "Lindsey Graham Act" that directly targeted Russian oil industries just one month ago. Under the new agreement, about 2.3 million barrels of diesel are scheduled to be supplied to the United States and other countries this month, followed by additional shipments estimated at about 7.6 million barrels during November and the following months, in an attempt to calm the record prices that consumers at gas stations are suffering from.
Market Challenges and Uncertainty
Despite the announcement's impact on trading, some analysts doubt the ability of these quantities to cause a radical change in the global diesel market balance. Caution is increasing in the markets due to the ambiguity surrounding the effectiveness of this agreement and the duration of the sanctions exemption, especially in light of the continuing geopolitical tensions in the Strait of Hormuz region.
Available data indicate that oil tanker traffic through the waterway has seen a notable decline, as the seven-day moving average fell to 8.5 million barrels per day, compared to about 20 million barrels per day in the previous week, amidst ongoing reports of tankers being attacked, which increases global supply pressures and maintains price volatility despite recent diplomatic efforts.
