Oil declines in anticipation of Russia's supply increase

Oil fell on Monday after US President Donald Trump announced that Russia and Ukraine had agreed to stop attacks on energy facilities.

The expectation that Russia will increase its diesel supply also eased supply concerns in the market.

Brent oil futures decreased by 1.47 percent to $103.18 per barrel, and US crude oil (WTI) decreased by 1.68 percent to $90.31. ICE gas oil futures, which track diesel prices, also fell 3 percent to $1,436 per barrel.

Trump announced on Friday that Russia would immediately supply more than 300 thousand metric tons, approximately 2.25 million barrels, of diesel to the US and global markets.

KCM Trade Chief Analyst Tim Waterer said these developments reduced short-term supply pressure. However, Waterer stated that the decline in oil prices may remain limited due to uncertainties regarding the validity of the ceasefire and how long it will last.

International Energy Agency (IEA) President Fatih Birol also said that countries should evaluate the need to release additional diesel stocks and accelerate previously committed stock releases.

Tension in the Middle East supports prices

Despite supply expectations from Russia, conflicts in the Middle East support Brent oil to remain above $100 per barrel. The Houthis claimed responsibility for the attack on Riyadh's international airport on Saturday, in which 13 people died and more than 300 were injured. Saudi officials reported that there were injuries in a new attack on the airport on Sunday.

Trump announced that the United States is considering joining Saudi Arabia's attacks on the Houthis as part of the regional conflict linked to Iran. The increase in tanker attacks passing through the Strait of Hormuz also threatens the recovery in Middle East oil exports. It was reported that a tanker was hit by a drone in Oman's Sohar anchorage area, and another tanker was damaged by an unidentified ammunition while passing through the Strait of Hormuz.

Goldman Sachs increased its December Brent oil price forecast from $85 to $90 per barrel.

On the other hand, Shell, Chevron and BP are working to restart production on platforms and send back personnel after Hurricane Isaias reached the coast of the Gulf of Mexico on Saturday.