By James Calloway

Brent settled above $107/bbl on Oct. 12, up more than 2% on the day and at its highest level since Sept. 29, as attacks on Saudi Arabia and commercial shipping near the Strait of Hormuz outweighed a US-Russian diesel supply deal announced three days earlier. WTI followed at $93.7/bbl, also a Sept. 29 high.

The reversal matters for practitioners on both desks. It strips out, at least for now, the bearish refining read that traders took from President Donald Trump's Oct. 9 announcement of additional Russian diesel barrels — and it puts a geopolitical floor back under a market that had been pricing easing supply risk.

What drove the price move?

Yemen's Iran-aligned Houthi movement claimed a Saturday strike on Riyadh's international airport, with additional attacks reported Sunday. Separately, UK Maritime Trade Operations (UKMTO) reported a tanker struck by a drone near Sohar, Oman, and another vessel damaged while transiting the Strait of Hormuz.

Those incidents threaten the recovery in Middle East crude exports recorded through September. Roughly a fifth of global seaborne crude moves through Hormuz, so any sustained disruption risk reprices freight, insurance and destination flexibility at once.

Goldman Sachs responded by raising its December Brent forecast to $90/bbl from $85/bbl, citing a geopolitical risk premium it estimates at slightly more than $20/bbl.

"We maintain our base case that continued adaptation of Mideast supply will eventually reduce crude oil prices, while potential renewed escalation still poses significant net upside risk," Goldman Sachs said in an Oct. 11 note.

Takeaway: the bank still sees prices falling eventually, but the tail risk now leans clearly to the upside.

What does the Russian diesel deal actually deliver?

On Oct. 9, Trump announced an agreement with Russian President Vladimir Putin to increase diesel supplies to the US and international markets. The stated schedule:

• An initial tranche of more than 300,000 tonnes — about 2.25 million bbl of diesel
• 500,000 tonnes in November
• 1 million tonnes per period thereafter

The US Treasury authorized certain Russian diesel transactions under a temporary sanctions exemption, and Moscow partially eased its diesel export restrictions on Oct. 10.

The market's first read was bearish on products: ICE gasoil futures fell 2.3%, and New York Harbor diesel futures dropped about 4.5% on the news.

The physical follow-through is far less certain. Ukrainian strikes on Russian refineries have cut processing capacity, and Russia faces its own domestic fuel-supply pressure. Actual export volumes will hinge on refinery runs, available inventories, freight and storage logistics, and how the sanctions exemption is implemented.

Takeaway: the headline tonnage is a ceiling, not a commitment — delivered barrels are the only number that counts.

Will the energy ceasefire hold?

Trump also announced that Russia and Ukraine had agreed to halt attacks on energy infrastructure. If implemented, that would reduce the risk of further refinery outages, support Russian fuel production and exports, and limit damage to Ukrainian energy assets.

Early signs are poor. Ukrainian President Volodymyr Zelenskiy accused Russia of violating the proposed ceasefire; Russia had not publicly commented.

"It is increasingly evident that Russia is unwilling to accept an energy ceasefire proposed by the US and intends to continue its terrorist air attacks against our people and communities," Zelenskiy wrote in an Oct. 12 post on X.

Takeaway: without enforcement, the ceasefire changes the risk narrative faster than it changes refinery runs.

The watch items

Three dates and numbers will settle whether this week's price action sticks: the durability of the Hormuz shipping corridor, the first Russian diesel cargoes actually lifting under the Treasury exemption, and any verification mechanism — or breach — of the energy ceasefire. Until then, Goldman's $20/bbl premium is doing more price discovery than any supply schedule.