Oil hovers near $105 as Trump eases Russian fuel sanctions
What's the story
Oil prices witnessed a slight dip on Tuesday, following a nearly $2 per barrel increase in the previous session. West Texas Intermediate (WTI) crude was trading at $92.84 per barrel, down by $0.90 or 0.96%. Meanwhile, Brent crude fell by $1.01 or 0.95% to settle at $105.60 per barrel after closing at its highest since September 15 on Monday at $106.65 per barrel.
Market relief
US lifts sanctions on Russian fuel temporarily
The oil markets have found some respite after US President Donald Trump announced that Russia has agreed to supply diesel to the global market.
The US administration has temporarily lifted sanctions on Russian fuel, aimed at depriving Moscow of funds for its war on Ukraine.
These additional supplies could ease tightness in global fuel markets and temper some supply concerns that have been supporting crude prices in recent weeks.
Ongoing tensions
Concerns over legality of Trump's agreement with Russia
US lawmakers have raised concerns that Trump's agreement with Russian President Vladimir Putin may violate US law prohibiting imports of Russian energy until Moscow ends its aggression against Ukraine.
Meanwhile, fears over the vulnerability of energy infrastructure and shipping lanes in the Gulf region were heightened after Houthis attacked Riyadh's international airport over the weekend.
Attacks on tankers near the Strait of Hormuz also threatened to disrupt the recovery in Middle East supplies seen in September.
Demand forecast
OPEC cuts oil demand growth forecast
The Organization of the Petroleum Exporting Countries (OPEC) has cut its oil demand growth forecast for this year to 400,000 barrels per day (bpd), from 1.4 million bpd at the start of the year.
This comes as shipping and insurance costs have surged to unprecedented levels, exceeding one-third of commodity value.
The higher costs are hampering smooth transportation of crude oil and petroleum products.
Price prediction
Goldman Sachs predicts Brent crude could fall to $60
Goldman Sachs has predicted 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 also warned that further escalation in the region could push prices significantly higher.
"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.