Brent and WTI decline nearly 2% as traders book profits after Friday’s rally, but West Asia shipping disruptions and falling Gulf crude flows keep global oil markets on edge

Global crude oil prices retreated on Monday, October 19, 2026, after reaching their highest levels in months in the previous session. Investors booked profits following a sharp rally, while a US decision to waive certain sanctions and tariffs on Russia raised expectations of additional fuel supplies entering the international market.

Brent crude futures fell $2.29, or 2.08%, to $107.57 per barrel by 0619 GMT. The benchmark had settled at its highest level since May 19 on Friday. US West Texas Intermediate (WTI) crude declined $1.95, or 1.92%, to $99.46 per barrel after closing at its highest level since September 17.

The decline reflects a change in short-term sentiment rather than a clear resolution of the global supply crisis. Although the US move could facilitate additional Russian fuel exports, attacks on commercial vessels and disruptions to oil shipments through the Gulf continue to threaten physical supplies.

For energy markets, the key question is whether additional Russian exports can offset the reduction in crude flows from West Asia. Until the scale and duration of the supply changes become clearer, oil prices may remain volatile.

Why Are Crude Oil Prices Falling?

The immediate trigger for Monday’s decline was the US decision to waive key sanctions and tariffs under legislation referred to in the report as the Graham Act. US President Donald Trump signed an executive order on Friday, raising expectations that restrictions affecting Russian energy supplies could be eased.

The decision followed an agreement between Trump and Russian President Vladimir Putin involving diesel exports to the United States and other countries. The reported arrangement envisaged shipments of approximately 2.3 million barrels during the current month, potentially increasing to around 7.6 million barrels per month.

Higher Russian fuel exports could improve availability in international markets and reduce some of the immediate pressure on prices. The prospect of additional supply encouraged traders to reduce bullish positions after crude had climbed sharply during the previous week.

However, the full implications remain uncertain. US Secretary of State Marco Rubio said the administration would take up to 60 days to assess the impact of the sanctions and tariffs on the global economy.

The waiver’s practical effect will depend on its precise scope, duration, implementation and the extent to which additional Russian supplies reach buyers. Markets are therefore treating the development as a potential source of relief rather than evidence that the global supply imbalance has been resolved.

West Asia Shipping Disruptions Continue to Threaten Oil Supply

Despite Monday’s decline, the underlying supply outlook remains fragile because of security risks affecting commercial shipping in West Asia.

Brent crude briefly touched $110 per barrel on Friday, its highest level since May, as attacks on commercial vessels raised concerns about the safety of maritime routes and the availability of energy supplies.

According to analytics firm Kpler, Gulf crude flows fell sharply to approximately 8.5 million barrels per day on a seven-day average last week, compared with more than 20 million barrels per day in the preceding week. The firm also reported at least 10 confirmed incidents involving commercial vessels during the week.

These disruptions are significant because the Gulf region is central to global oil exports. When shipments are delayed, rerouted or interrupted, buyers may need to seek alternative supplies, potentially increasing competition for available cargoes and lifting prices.

Even if additional Russian diesel becomes available, it may not immediately replace crude oil lost through disrupted Gulf shipments. Crude oil and refined products are different parts of the energy supply chain, and their impact on refinery operations and regional markets depends on product specifications, logistics and delivery schedules.

The distinction helps explain why crude prices can remain elevated even when announcements point towards additional fuel supplies.

US Sanctions Waiver: A Temporary Relief or a Lasting Change?

The US decision has introduced a new variable into the oil market at a time when energy prices are also a concern for American consumers.

Priyanka Sachdeva, head of market insight at Phillip Nova, described the move as an attempt to contain oil prices ahead of the US midterm elections. She argued that it does little to address physical supply disruptions in the Strait of Hormuz, where attacks on tankers continue to create uncertainty.

KCM Trade chief analyst Tim Waterer said the waiver could lead to higher Russian fuel exports but noted that mixed messaging has made the outlook difficult to assess. Until the details and duration are clearer, he said, markets may be reluctant to price in a sustained increase in supply.

The distinction between a temporary waiver and a structural change in global supply is important. A limited relaxation of restrictions may provide short-term relief, but a durable decline in prices would require a more dependable improvement in the balance between production, exports and consumption.

For traders, the next developments to watch include clarification of the waiver, actual shipment volumes, the response of other governments and any further disruption to key maritime routes.

Saudi Arabia and Regional Security Add to Market Uncertainty

Security concerns have extended beyond the immediate disruptions to commercial shipping. The possibility of further escalation involving regional actors has added to uncertainty about energy infrastructure and export routes.

Egypt has indicated its readiness to support Saudi Arabia in defending its security and stability against Yemen’s Iran-aligned Houthi movement, according to the report. Such developments matter to energy markets because further attacks or retaliatory actions could threaten shipping lanes, ports and other critical infrastructure.

Oil prices tend to react quickly when traders perceive a greater risk of supply interruptions. However, the eventual impact depends on whether security incidents translate into sustained losses of production or exports.

If shipments resume and regional tensions ease, the supply risk premium embedded in crude prices could decline. If disruptions intensify, prices could rise again even if Russian fuel exports increase.

Oil Outlook: Prices Could Remain Between $100 and $110

DBS expects oil prices to remain broadly within the $100–$110-per-barrel range as the US midterm elections approach. The bank's assessment reflects the competing influences of additional Russian supplies and continuing geopolitical risks.

Suvro Sarkar, DBS's head of energy research, said measures such as waivers on Russian sanctions appeared to be short-term responses and were unlikely to produce a major structural change in the supply situation.

The outlook highlights two opposing forces. On one side, additional Russian exports and weaker speculative demand could push prices lower. On the other, continued disruptions in West Asia could tighten physical availability and support prices.

The $100–$110 range is an analyst expectation, not a guaranteed trading boundary. Actual prices may move outside it if there is a major change in supply, demand, sanctions policy or regional security conditions.

Investors and businesses should therefore monitor developments in physical shipments alongside futures prices. A temporary decline in futures does not necessarily mean that the cost or availability of crude for refiners has returned to normal.

What Falling Crude Oil Means for India

India is particularly sensitive to international oil prices because it imports a substantial portion of its crude oil requirements. A sustained increase in crude prices can raise the import bill, put pressure on the rupee and complicate the management of inflation.

If oil prices remain elevated, the effects can extend across several parts of the economy.

Inflation: Higher energy costs can increase transportation, logistics and manufacturing expenses, potentially feeding into prices of goods and services.

Rupee and trade balance: A higher oil import bill can increase demand for foreign currency and add pressure to the country's external balance, depending on other capital and trade flows.

Oil marketing companies: Changes in crude prices can affect refinery margins, inventory valuations and the economics of selling petrol, diesel and other fuels. The final impact also depends on product prices, refining margins and domestic pricing decisions.

Aviation and transportation: Aviation turbine fuel, road transport and logistics businesses are exposed to energy costs, although the extent of the effect varies by company and its ability to pass on expenses.

Government finances: Changes in fuel prices and subsidies, where applicable, can affect fiscal calculations and the balance between consumer protection and public revenue.

A sustained decline in crude prices could ease some of these pressures. However, a short-lived correction may have a limited effect if physical supply disruptions continue or if prices quickly rebound.

Key Factors to Watch in the Coming Sessions

Several developments could determine the next direction of crude oil prices:

• Implementation of the US waiver: The scope and duration of the sanctions relief will influence how much additional Russian fuel reaches the market.

• Russian export volumes: Actual shipments will show whether the announcement translates into meaningful additional supply.

• Strait of Hormuz security: Further attacks or interruptions could quickly reverse the latest price decline.

• Gulf crude flows: Export and shipping data will help establish whether physical supply conditions are improving.

• Regional geopolitical developments: Escalation involving Iran-aligned groups or threats to energy infrastructure could increase the risk premium.

• US economic and political developments: Fuel prices remain economically and politically sensitive in the United States, particularly ahead of the midterm elections.

• Global demand: Changes in economic growth and refinery activity could influence how effectively additional supply is absorbed.

Traders should also distinguish between crude oil benchmarks and refined-product prices. Additional diesel supply may affect diesel markets differently from Brent or WTI, depending on regional demand and refinery conditions.

Market Outlook

Brent crude fell 2.08% to $107.57 per barrel on Monday, while WTI declined 1.92% to $99.46, as traders booked profits and assessed the possibility of higher Russian fuel exports following the US sanctions waiver.

The correction offers some relief after crude reached multi-month highs, but it does not yet signal a lasting improvement in global supply. Sharp reductions in Gulf crude flows and continuing security risks to commercial shipping remain major concerns.

For India, a sustained decline in crude oil would be positive for the import bill, inflation management and energy-intensive businesses. However, the benefits will depend on how long prices remain lower and whether shipping disruptions ease.

In the near term, oil markets are likely to remain sensitive to developments in Russia, the Strait of Hormuz and West Asia. The $100–$110 range identified by DBS provides a reference for the current outlook, but any major supply disruption could push prices higher, while a meaningful recovery in exports could deepen the correction.

Investors should watch actual supply data rather than relying solely on policy announcements. Until there is clearer evidence that physical flows are recovering, the oil market remains vulnerable to sudden price swings.