Oil ticks lower as Russia diesel supply prospects counter Gulf supply risks

Oil prices dipped on Tuesday, receding 0.57 percent to $106.04 a barrel for Brent crude futures and 0.5 percent to $93.27 a barrel for US West Texas Intermediate crude futures. This decline mirrored the previous day's uptick of nearly $2 per barrel. President Donald Trump announced Russia's agreement to supply diesel to global markets, prompting the US to temporarily lift sanctions on Russian fuel.

The aim was to alleviate tightness in fuel markets and offset some supply concerns that had buoyed crude prices recently. However, US lawmakers criticized the deal as potentially violating US law regarding energy imports from Russia until Moscow ceases its aggression against Ukraine. Analysts noted that while fresh diesel from Russia and steadier flows from Saudi Arabia offer some relief, the market remains more apprehensive about potential further attacks on ships or pipelines in the Gulf than reassured by additional barrels.

Concerns over the vulnerability of Gulf energy infrastructure and shipping lanes persisted following Iran-aligned Houthis' attack on Riyadh's international airport and tanker strikes near the Strait of Hormuz. These incidents threatened to disrupt the recent recovery in Middle East supplies and heightened fears of additional disruptions along crucial energy transit routes.

OPEC revised its oil demand growth forecast for the year downwards to 400,000 barrels per day from 1.4 million barrels per day, reflecting ongoing developments.