Oil prices fall as traders assess Russian diesel supply prospects and Saudi-Houthi conflict

Oil prices fell Tuesday as investors weighed prospects of more Russian energy entering global markets, while concerns over the Saudi-Houthi conflict limited losses.

Brent crude futures declined 1.48% to $105.05 a barrel, while U.S. West Texas Intermediate futures fell 1.57% to $92.27.

President Donald Trump on Monday defended his administration's decision to temporarily ease restrictions on Russian diesel supplies, despite bipartisan criticism from U.S. lawmakers who warned the move could undermine sanctions imposed over Moscow's war in Ukraine.

In a Truth Social post, Trump said that the European Union had spent billions of dollars on Russian energy imports and insisted he had made the right decision for Americans. The agreement would allow Russia to supply diesel to U.S. and global markets for six months.

Goldman Sachs said additional Russian diesel supplies were unlikely to significantly ease pressure on global fuel prices, estimating 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 a barrel.

The bank underscored in a note published Monday that Russian refinery outages jumped by 3 million barrels per day from a year earlier, limiting Moscow's ability to ramp up production.

Global diesel markets remain under significant strain, with U.S. inventories down 14% from a year earlier and visible stocks in China falling 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, or 20%, year on year.

Iran-backed Houthi militants in Yemen attacked King Khalid International Airport in Saudi Arabia's capital Riyadh on Saturday, leaving 12 people dead and more than 300 injured in a major escalation.

— CNBC's Kevin Breuninger contributed to this report.