Oil Slips Below $110 as a Possible US Waiver on Russian Energy Offsets Houthi Strikes on Saudi Sites

Brent crude futures fell 49 cents, or 0.45 per cent, to $109.06 a barrel by 0010 GMT on 20 October, a session after touching $110.70, the highest since 20 May. US West Texas Intermediate for November, which expires on Tuesday, eased 0.33 per cent to $103.32, and the more active December contract slipped 46 cents to $98.08.

A waiver that is not yet final

An executive order issued on Friday night waived key US sanctions and tariffs related to Russia, including duties on Russian goods and penalties for buying its oil and gas. President Trump said on Saturday that he had not made a final decision, and Secretary of State Marco Rubio said officials wanted more time to evaluate the situation. Russian supply has room to recover: the International Energy Agency reported last week that Russia's crude output rose by 65,000 barrels per day in September to 8.43 million bpd, still about 870,000 bpd below a year earlier.

Gulf risk outweighs the Russian offset

Yemen's Iran-aligned Houthis said on Monday that they had struck Saudi energy, airport and military targets, naming an Aramco site at Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh and Abha airport. Saudi authorities did not immediately confirm the claims, and Reuters could not verify them independently. Tim Waterer, chief analyst at KCM Trade, said extra Russian diesel offered some theoretical relief but that traders were more focused on the risk of further damage to Gulf energy infrastructure.

A preliminary Reuters poll pointed to draws in US crude and product inventories for the week just ended, which also helped keep prices high.