Oil Price Today (October 12): Crude oil dips to $103 despite simmering Iran war tensions. Here’s why

Oil prices fell on Monday as expectations of increased Russian supplies weighed on the market after US President Donald Trump said Ukraine and Russia had agreed to stop attacks on each other’s energy facilities. The announcement followed a US deal with Moscow to supply diesel.

Trump announced the energy ceasefire on Sunday, following Friday’s announcement of the diesel-supply deal with Russia. Ukrainian President Volodymyr Zelenskiy said he was still awaiting details of the agreement, while Russia had not commented.

Crude oil price on October 12

Brent crude futures declined $1.42, or 1.36%, to $103.35 a barrel, while US West Texas Intermediate crude fell $1.42, or 1.60%, to $90.42 a barrel.


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Iran war tensions continue

The ongoing conflict in the Middle East continued to support Brent crude above $100 a barrel. Yemen’s Houthis claimed responsibility for a strike on Riyadh’s international airport on Saturday that killed 13 people and wounded more than 300. Saudi authorities also reported injuries in another attack on the airport on Sunday.

Trump said on Saturday that the United States was considering joining Saudi strikes against the Houthis, as the conflict spreads from the wider war with Iran launched by the US and Israel in February.

Attacks on tankers passing through the Strait of Hormuz have also increased this month, threatening to undermine the recovery in Middle Eastern crude exports recorded in September. The United Kingdom Maritime Trade Operations reported over the weekend that a tanker was hit by a drone near the Sohar anchorage in Oman, while another vessel was damaged by an unknown projectile while transiting the Strait of Hormuz.

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Where are prices headed?

Uncertainty over how the conflict will end remains a key concern for markets. JPMorgan analysts said they did not know how to model the eventual outcome, noting that the bank had initially assumed the US administration would avoid crossing certain economic thresholds when the conflict began. Six months into the war, many of those thresholds had been crossed, while a clear exit strategy remained absent.

The growing threat of further supply disruptions has also raised the prospect of higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks demonstrated how disruptions to shipping could spread and intensify. Goldman Sachs has outlined a scenario in which oil prices could climb to $120 a barrel if attacks on vessels in the Middle East escalate. If exports return to normal, the bank expects prices to move back towards $80 a barrel.

Speaking to Bloomberg, Struyven said risks to shipping had become a major driver of oil prices. Goldman Sachs sees meaningful upside potential for crude and expects natural gas and refined product prices to rise as well. Struyven added that supply shocks affecting gas and fuels were larger than those in the crude oil market.

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