Oil prices drop as traders weigh Russian diesel supply outlook amid Saudi-Houthi tensions

WASHINGTON, 13 OCTOBER 2026 —

Oil Prices Dip as Russian Diesel Easing Balances Saudi-Houthi Conflict Risks

Global oil prices fell on Tuesday as traders weighed the potential for increased Russian diesel supplies against escalating tensions in the Red Sea, with Brent crude and U.S. WTI futures declining by over 1% amid mixed signals on supply disruptions.

The drop came as investors assessed the implications of a U.S. decision to temporarily ease restrictions on Russian diesel exports, while concerns over a Houthi attack on Saudi Arabia’s Riyadh airport—marking a major escalation in the Saudi-Houthi conflict—limited further losses. The conflicting factors left markets in a delicate balance, with analysts warning that while Russian diesel could ease some pressure, broader geopolitical risks remained unresolved.

Brent crude futures settled at $105.05 per barrel, down 1.48% from the previous session, while U.S. West Texas Intermediate (WTI) futures fell 1.57% to $92.27 per barrel. The declines reflected cautious optimism over potential Russian diesel inflows, tempered by lingering fears over supply chain disruptions stemming from the Saudi-Houthi conflict.

The U.S. move to relax restrictions on Russian diesel exports—announced by former President Donald Trump on Monday—sparked bipartisan criticism in Washington, with lawmakers warning that the decision could undermine sanctions imposed over Moscow’s invasion of Ukraine. In a Truth Social post, Trump defended the six-month agreement, arguing that it would allow Russia to supply diesel to U.S. and global markets while countering European reliance on Russian energy.

He claimed the decision was in America’s interest, despite EU spending "billions of dollars" on Russian energy imports.

However, Goldman Sachs analysts cautioned that any additional Russian diesel supplies would have limited impact on global fuel prices. The bank estimated that an increase of 800,000 metric tons—equivalent to roughly 6 million barrels—would lower wholesale diesel prices in the U.S. Gulf Coast and Europe by just $1 to $2 per barrel.

The bank’s assessment highlighted deeper structural issues, noting that Russian refinery outages had surged by 3 million barrels per day year-over-year, constraining Moscow’s ability to ramp up production.

Global diesel markets remain under significant strain, with U.S. inventories 14% lower than a year ago and visible stocks in China down 11%, according to Goldman Sachs. The bank attributed the shortages to seven consecutive months of declining global diesel production, with seaborne exports falling by 1.4 million barrels per day (20% year-over-year). The prolonged decline has tightened supply chains, particularly in Asia, where demand remains robust despite economic slowdowns in key markets.

The Saudi-Houthi conflict introduced an additional layer of uncertainty, with Iran-backed Houthi militants launching a major attack on King Khalid International Airport in Riyadh on Saturday. The assault killed 12 people and injured over 300, marking one of the deadliest strikes on Saudi territory in recent years.

While the immediate impact on oil markets was muted, the escalation raised concerns over potential disruptions to Red Sea shipping lanes—a critical route for global oil and gas trade. Saudi Arabia has not yet confirmed whether the attack will affect its oil production or exports, but the incident underscores the fragility of regional stability.

For Malaysian markets, the developments carry mixed implications. While lower oil prices could ease pressure on domestic fuel subsidies and corporate costs, the underlying tensions—particularly in the Red Sea—pose risks to shipping and trade flows. Malaysia, a key player in global oil and gas trade, could face higher insurance premiums or logistical delays if the conflict intensifies. Meanwhile, the easing of U.S.

sanctions on Russian diesel may provide some relief to regional refiners, though the limited supply increase suggested by Goldman Sachs suggests only marginal benefits.

The outlook remains uncertain, with traders monitoring both the U.S. diesel policy’s long-term effects and the Saudi-Houthi conflict’s trajectory. If the Houthi attacks persist or expand, they could trigger broader market reactions, particularly if shipping disruptions escalate. Conversely, if Russian diesel supplies materialize as expected, they may help stabilize diesel prices in the short term—though Goldman Sachs’ analysis suggests the impact will be modest.

For now, oil markets remain in a state of flux, balancing geopolitical risks against tentative signs of supply relief.

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