Oil eases as markets assess potential waiver on Russian energy, Middle East supply risks

Oil prices dropped on Tuesday as investors evaluated a US executive order waiving certain sanctions and tariffs on Russian energy exports. Brent crude futures declined by 49 cents, or 0.45%, reaching $109.06 per barrel, while West Texas Intermediate (WTI) crude for November delivery fell by 0.33%, settling at $103.32 per barrel. The December contract was down 46 cents, or 0.47%, at $98.08 per barrel. The previous session saw Brent crude peak at $110.70 per barrel, its highest level since May 20.

On Friday night, President Trump issued an executive order waiving key US sanctions and tariffs against Russia, including duties on Russian goods and penalties for purchasing its oil and gas. However, Trump has not yet announced a final decision on the matter, and Secretary of State Marco Rubio stated that officials require more time to assess the situation.

Russia's crude oil production rose by 65,000 barrels per day in September to 8.43 million barrels per day (bpd), but it remains 870,000 bpd below the previous year's level, according to the International Energy Agency (IEA). While the possibility of increased Russian diesel supply provides some theoretical relief, traders are primarily concerned with the ongoing threat of further damage to energy infrastructure in the Gulf region.

Yemen's Iran-aligned Houthi rebels claimed responsibility for multiple attacks on Saudi targets, including an Aramco facility in Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh, and Abha airport. Saudi authorities have not confirmed these allegations, and Reuters could not independently verify the reports. The attacks resulted in 58 deaths and over 200 injuries, as well as a government security forces training camp in Yemen's Shabwa province.

These renewed attacks have increased concerns about regional stability and the potential risk to energy supply from the Middle East, thereby maintaining oil prices above $100 per barrel. In the US, crude oil inventories and product stocks were expected to have decreased last week, according to a preliminary Reuters poll.