Oil Prices Show Why Russian Diesel Cannot Offset the Gulf Supply Gap

West Texas Intermediate crude for November delivery traded at $93.68 a barrel at 10:24 a.m. ET on Tuesday, October 13, 2026, down 6 cents or 0.06% on the session. Brent crude traded at $105.70, down $1.00 or 0.94%. Murban crude, the Abu Dhabi benchmark priced off Gulf barrels, traded at $110.10, down $2.14 or 1.91%.

Those flat-to-modest numbers hide a violent morning. WTI fell 2.09% to $91.78 in early trading, and Brent dropped 2.09% to $104.40, as markets priced in additional Russian diesel supply after the Trump administration temporarily lifted U.S. sanctions on Russian fuel. Brent touched $104.63 by mid-morning in Asia, down $2.02 or 1.89%. Then the selling stopped. By the U.S. open, WTI had recovered almost all of its loss, and Brent had clawed back more than half.

The rebound came from the Gulf. Saudi Arabia said Tuesday it was facing a new barrage of incoming fire, with Riyadh’s King Khalid International Airport shut through Saturday. Tanker attacks near the Strait of Hormuz over the weekend kept Gulf shipping on edge. Every time crude dipped on the diesel headline, the Saudi-Houthi conflict pulled it back.

Monday set the range. Brent peaked at $107.33 on Monday, its highest level in more than two weeks and an almost one-month high, before closing near $106, up roughly $1.20 from Friday. WTI touched $94.36 intraday and finished up more than 1.60% at $93.17. On Monday morning, WTI traded at $93.78, up $1.93 or 2.10%, and Brent at $106.80, up $2.09 or 2.00%.

The longer frame shows how far crude has run. Brent is up 70% over the past 12 months and essentially flat on the month, up 0.39%. WTI is up 59% year over year but down 8% over the past month, a divergence that has widened the Brent-WTI spread to $12.02 a barrel, based on Tuesday’s 10:24 a.m. ET prices. That spread reflects a market where seaborne barrels exposed to Gulf and Red Sea risk trade at a steep premium to landlocked U.S. crude.

The thesis for this forecast is direct: the Russian diesel deal is a refined-product measure measured in tens of thousands of barrels a day, while the Gulf disruption it is supposed to offset is measured in millions. As long as Houthi attacks on Saudi Arabia continue and Hormuz tanker traffic stays near its lowest since May, Brent holds the $104 to $107 zone with an upside bias. A break above Monday’s $107.33 high targets $110. The downside case requires a credible de-escalation in the Gulf, not more Russian diesel.

The Russian Diesel Deal: 75,000 Barrels a Day Against a Multi-Million-Barrel Gulf Gap

The headline that knocked crude 2% lower Tuesday morning was the Trump administration’s decision to temporarily lift U.S. sanctions on Russian diesel exports. President Trump said Russia had agreed to supply diesel to the U.S. and global markets, and the waiver runs for six months. The measure was designed to deprive Moscow of less revenue than full sanctions would while bringing more refined fuel into a tight market ahead of the November 3 midterm elections.

The volumes are small. Moscow pledged to deliver 300,000 tonnes of diesel in October, equivalent to 75,000 barrels a day. That rises to 500,000 tonnes in November, or 125,000 barrels a day, and peaks at 1 million tonnes, or 250,000 barrels a day, by year-end 2026. Even at the peak, 250,000 barrels a day is a fraction of the supply missing from Gulf markets.

The impact on fuel prices is likely to be limited. Market estimates suggest that an increase of 800,000 metric tons of Russian diesel, equivalent to roughly 6 million barrels, would have only a modest effect on U.S. wholesale diesel prices. Global diesel markets remain under significant strain, with refined-product exports from the Gulf running at just 60% of prewar levels.

The political reaction has been sharp. Trump defended the decision on Truth Social, arguing that the European Union had spent billions of dollars on Russian energy imports and that he had made the right call for Americans. Lawmakers from both parties warned that the move could undermine the sanctions regime imposed over Moscow’s war in Ukraine. Former Vice President Kamala Harris said the plan reeks of weakness. Chevron’s CEO called a related decision on diesel and fuel exports unwise.

Doubts about delivery are the other problem. Russian crude exports dropped to their lowest level since May in recent weeks, and Ukrainian strikes on Russian energy infrastructure have hit refining capacity. Whether Russia can actually ship the pledged volumes on schedule is an open question that traders are already discounting.

The International Energy Agency is pushing a parallel fix. Executive Director Fatih Birol called on member countries to assess whether additional diesel releases were necessary, and urged countries that had not yet delivered their full pledged stockpile volumes to accelerate releases, prioritizing diesel. Strategic releases add supply faster than Russian shipments but draw down buffers that may be needed if the Gulf disruption worsens.

The deal has already failed its first market test. Crude’s 2% Tuesday dip on the diesel headline reversed within hours, and the Russian supply narrative has been unable to push Brent below $104. The market is telling Washington that refined-product relief does not solve a crude supply problem.

Houthi Strikes on Saudi Arabia: Riyadh Airport Shut Through Saturday

The Saudi-Houthi conflict is the single biggest driver of crude prices this week. Iran-backed Houthi forces in Yemen attacked King Khalid International Airport in Riyadh on Saturday, killing 12 people and injuring more than 300 in a major escalation. A separate strike hit a departure terminal. The Houthis also launched attacks on a second major Saudi airport over the weekend. At least 20 people, including a U.S. national, have been killed in a week of Houthi attacks on Saudi Arabia.

Saudi Arabia said Tuesday it was facing a new barrage of incoming fire and extended the suspension of operations at Riyadh’s main airport until Saturday. The Houthis are threatening to further damage the kingdom’s energy infrastructure. Saudi Arabia has become the biggest wild card in the oil market this month, the embodiment of supply risk in a region already constrained by the Hormuz disruption.

Washington is weighing direct involvement. Trump said he is considering joining the Saudi-led offensive against the Houthis. A Houthi official responded Monday that there would be a swift and painful response if the U.S. joins the strikes. Trump has warned of consequences after Houthi tanker attacks earlier this month.

Iran sits behind the Houthis. The Islamic Republic is reportedly fortifying its nuclear sites ahead of possible renewed U.S. attacks after the November 3 midterms, telling regional officials it would retaliate across the Middle East if the U.S. strikes. Iran is preparing its population for war with rallies and missile training. Trump said last Thursday that U.S. forces would not attack Iran before the midterms, which puts a three-week calendar on the risk.

The Saudi exposure goes beyond airports. Saudi Red Sea crude exports have fallen 41% since their March peak as the Houthi threat holds. Red Sea tanker traffic has dropped to a multi-month low. A Saudi crude tanker went dark to slip through the Bab el-Mandeb strait, and Houthi threats have forced another Saudi crude tanker onto the Suez route to Asia. Saudi Arabia is weighing higher crude prices for Asian buyers as Red Sea shipping costs rise.

The Houthis are part of Iran’s regional alliance alongside Lebanon’s Hezbollah and armed groups in Iraq. Civilian casualties are mounting in Yemen: at least five civilians, including a five-year-old child, were killed in Houthi shelling in Taiz province. Qatar’s emir called for greater efforts to secure Gulf and Hormuz shipping and to protect energy facilities.

For crude, the Saudi conflict creates two kinds of risk. The first is direct infrastructure damage: a successful strike on a Saudi export terminal, pipeline or processing plant would take barrels off the market immediately. The second is a widening war that pulls the U.S. into Yemen and raises the probability of Iranian retaliation against Gulf shipping. Either scenario sends Brent through $110.

Hormuz Tanker Traffic at Its Lowest Since May: Gulf Exports Stuck at 81% of Prewar Levels

The Strait of Hormuz remains the structural constraint on global oil supply. Another tanker was targeted in the strait over the weekend, following a phone call between the Saudi and Iranian foreign ministers. Missile strikes on tankers seeking to transit Hormuz have proliferated, keeping Gulf flows on edge.

The traffic data shows the damage. Hormuz tanker crossings sank to their lowest level since May as war risk spiked. Commodity vessel traffic through the strait has run at roughly 10 ships a day over a recent ten-day stretch, the lowest volume since May. Iran has said Hormuz will stay closed until its demands on the U.S. are met, and its senior security official has announced plans for a new restricted maritime zone beyond the strait.

Gulf export volumes are recovering but remain well short of normal. Gulf oil exports reached 81% of prewar levels in September. Crude and condensate shipments recovered to 91%, but refined-product exports remained at just 60%. The weekend tanker attacks threaten to interrupt even that partial recovery. Earlier estimates put the Hormuz disruption at 8.3 million barrels a day, or 36% of Gulf oil, kept from global markets.

The scale dwarfs every offsetting measure. Russia’s diesel pledge peaks at 250,000 barrels a day. Gulf refined-product exports at 60% of prewar levels leave a gap many times larger. Tanker data has contradicted official U.S. claims that Middle East oil flows have normalized.

Buyers are reorganizing supply chains around the disruption. India is scouring Angola and Venezuela for crude as Middle East supply dries up. Indian refiner MRPL has barred crude suppliers from using Hormuz and Red Sea routes. Japan is backing overseas oil pipelines to reduce its dependence on Hormuz. Persian Gulf producers are looking for alternative export routes and proposing new pipeline projects. China’s crude imports have surged as it builds stockpiles.

ADNOC, the Abu Dhabi national oil company, has issued its seventh crude tender since June despite Hormuz and Red Sea risks, a sign that Gulf producers are finding ways to move some barrels. Murban crude, priced off Abu Dhabi supply, traded at $110.10 Tuesday, a $4.40 premium to Brent, which captures the cost of getting Gulf barrels to market.

The Hormuz disruption has persisted for months. Brent first crossed $100 in March as Iran stepped up attacks on oil and transport facilities. Iran’s Revolutionary Guards warned at the start of March that no vessel would be allowed through the strait. Since then, the market has lived with a partial closure, intermittent attacks and a slow, incomplete recovery in flows.

For the forecast, Hormuz sets the floor. As long as traffic runs near its lowest since May and Gulf product exports sit at 60% of normal, Brent has little room to fall below $100.

OPEC+ Holds October Targets and Prepares to Freeze Quotas Until 2027

OPEC+ has stopped trying to manage supply with quota changes. Seven core OPEC+ members, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, kept their October 2026 production targets unchanged at a virtual meeting on September 6. The group set a combined October quota of 31.01 million barrels a day, excluding compensation volumes.

The individual targets show where the capacity sits. Saudi Arabia’s October target is 10.478 million barrels a day. Russia’s is 9.9 million. Iraq’s is 4.4 million, Kuwait’s 2.676 million, Kazakhstan’s 1.6 million, Algeria’s 1.0 million and Oman’s 0.8 million.

The quotas no longer bind. Export disruptions in the Strait of Hormuz and constraints on Russian oil flows have kept OPEC+ production below its official target levels despite recent quota increases. The group spent months raising targets while actual output fell. In August, it completed a phased rollback of a 1.65 million barrel-a-day voluntary production cut that had been in place since 2023, raising output targets by 188,000 barrels a day. Actual production has not kept up.