Oil prices edged lower on Monday, 12 October, as markets digested the announcement of an alleged ‘energy ceasefire’ between Russia and Ukraine brokered by the United States — a claim that has yet to be confirmed by either Moscow or Kyiv. The development overshadowed mounting concerns over escalating tensions in the Middle East, following fresh Houthi rebel attacks on Saudi Arabia.

During morning trading, North Sea Brent crude, the European benchmark, slipped 0.04% to USD 104.68 per barrel, while West Texas Intermediate (WTI), the US benchmark, fell 0.52% to USD 91.37 per barrel.

Moving in the opposite direction, natural gas futures traded in Amsterdam gained 0.57%, reaching EUR 81.93 per megawatt-hour.

The most pronounced moves were in European diesel futures, which shed more than 8% overnight before paring losses to around 6% by morning.

The selloff followed an announcement by US President Donald Trump that his Russian counterpart, Vladimir Putin, had agreed to release 300,000 tonnes of diesel immediately, notwithstanding the international sanctions in place on Russian energy products.

Over the weekend, Trump also declared an alleged ‘energy ceasefire’ between Moscow and Kyiv, stating the agreement would take effect immediately.

Ukrainian President Volodymyr Zelensky expressed surprise at the announcement, though he indicated he would support such an arrangement if Russia also upheld it. As of the time of reporting, the Kremlin had not publicly commented on the existence of any such agreement.

Uncertainty over the trajectory of the conflicts in Ukraine and the Middle East continues to weigh on energy markets.

In Saudi Arabia, Iran-backed Houthi rebels carried out new strikes on an airport, while incidents involving vessels in the Strait of Hormuz — one of the world’s most critical oil shipping lanes — continued to be reported.

Despite the escalation in tensions, the price reaction has been relatively contained, as maritime oil transport has not been fully disrupted and Houthi attacks have not struck oil production infrastructure.

‘It is not the energy infrastructure that is being affected,’ said Warren Patterson, head of commodities strategy at ING Groep, as quoted by Bloomberg.