Global oil prices slid on Monday as expectations of increased Russian energy exports eased supply shortage fears. Traders reacted to claims of a diplomatic breakthrough impacting refining supply chains.
Brent crude futures dropped $1.54, or 1.47%, to $103.18 a barrel in early Asian sessions, while US West Texas Intermediate fell $1.54, or 1.68%, to $90.31.
The decline followed statements by US President Donald Trump asserting that Ukraine and Russia agreed to halt strikes on energy infrastructure.
The announcement came shortly after Washington negotiated a bilateral diesel-supply deal with Moscow.
Under the supply agreement, Russia is expected to deliver over 4.8 million tons of diesel to global markets in phases. The first tranche involves an immediate release of 300,000 tons.
Russia would supply another 500,000 tons in November and a further 1 million tons “immediately thereafter”, President Trump said.
The diplomatic shift marks a major policy pivot, partially unwinding previous US energy sanctions intended to squeeze Kremlin revenues.
Market analysts note the sudden influx of refined product reduces geopolitical risk premiums.
The price retreat comes despite ongoing geopolitical volatility elsewhere. A recent attack on Riyadh’s airport and ongoing Middle East tensions had previously pushed delivered crude near multi-month highs.
Additionally, the US Department of Energy recently authorized an emergency release of 4 million barrels from the Strategic Petroleum Reserve. The move aimed to offset regional disruptions caused by Hurricane Isaias.
Ukrainian President Volodymyr Zelenskyy criticized the US-Russia fuel agreement, calling it a weak decision that provides Moscow billions in war funding. Kyiv officials noted they were not consulted prior to the announcement.
Traders now await official confirmation from the Kremlin regarding the terms of the energy truce, as well as verifiable delivery schedules for the promised diesel shipments.
