Oil prices fell on Tuesday after US moves to increase global fuel supplies raised hopes of easing the supply shortage crisis, prompting investors to take profits following strong gains in the previous session, amid continued concerns about supply disruptions in the Middle East.
Brent crude futures for December delivery fell 1%, losing $1.09 to trade at $105.56 a barrel, while U.S. West Texas Intermediate crude futures for November delivery declined by $1.08 to $92.66 a barrel.
These losses came after the two benchmark crudes rose by about two dollars a barrel during trading on Monday, with Brent crude closing at its highest level since September 15, according to Reuters, supported by escalating geopolitical tensions and fears of disruption to oil flows from the Middle East region.
According to Bloomberg, oil prices have lost some of their recent gains after Brent crude rose by more than 6% during the previous three sessions, amid concerns that the widening conflict in the Middle East could hinder the recovery of oil supplies coming from the region.
Pressure on prices increased following statements by US President Donald Trump regarding Russia's agreement to pump additional quantities of diesel into global markets, coinciding with Washington's decision to temporarily suspend some sanctions imposed on Russian fuel, in an attempt to boost supply and contain the sharp rise in energy prices.
According to Reuters, the prospect of increased Russian diesel exports has helped to ease concerns about a global fuel shortage.
However, markets are still reacting cautiously to these developments, given the ongoing challenges facing Russian refining capacity and the lack of clarity regarding the size of additional supplies that could reach markets in the coming period.
Despite the current decline, oil prices are still supported by escalating geopolitical risks, especially after the recent attacks targeting Saudi Arabia, along with the continued threats to oil tanker traffic in the Strait of Hormuz, which reinforces concerns about the security of global supplies.
Crude oil price movements in the coming sessions are likely to remain hostage to the balance between increased Russian supply and continued supply disruptions in the Middle East, as any breakthrough in fuel flows could lead to further declines, while military developments or disruptions to shipping routes could push prices back up again.
