Oil prices fell on Monday after US President Donald Trump waived key sanctions and tariffs on Russia, raising the prospect of increased Russian fuel exports amid continuing supply concerns in the Middle East.
Brent crude futures dropped $1.94, or 1.77%, to $107.92 a barrel by 0227 GMT. The benchmark had settled at its highest level since May 19 on Friday.
US West Texas Intermediate (WTI) crude fell 83 cents, or 0.82%, to $100.58 a barrel after closing at its highest level since September 17.
The decline followed a recent rally driven by concerns over shipping security and disruptions to global energy supplies.
Trump Waives Key Restrictions on Russian Oil
Trump signed an executive order on Friday waiving key sanctions and tariffs under legislation known as the Graham Act. He signed the law last month following pressure from lawmakers seeking to increase pressure on Moscow over its war in Ukraine.
US Secretary of State Marco Rubio said the administration would take up to 60 days to assess the economic impact of the sanctions and tariffs on the global economy.
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The move followed an agreement announced by Trump with Russian President Vladimir Putin to export diesel to the United States and other countries. According to Trump’s announcement, shipments are expected to begin at around 2.3 million barrels this month before rising to approximately 7.6 million barrels a month.
Ukrainian President Volodymyr Zelenskyy criticised the US measures, saying they would harm Ukraine.
Traders Weigh Supply Prospects Against Uncertainty
Analysts said the easing of restrictions could eventually increase Russian fuel supplies, although uncertainty over the scope and duration of the waiver has limited its immediate impact on market expectations.
“The combination of a softer tone around sanctions and some profit-taking after recent gains is helping to cap the upside in the near term,” said Tim Waterer, chief analyst at KCM Trade.
Waterer said the waiver could lead to higher Russian fuel exports, but mixed signals from Washington had created uncertainty.
“Until the details and duration are clearer, the market is unlikely to fully price in a sustained increase in supply,” he said.
Brent briefly touched $110 a barrel on Friday for the first time since May as Middle East tensions and security threats raised concerns about maritime traffic and tighter energy supplies.
Attacks Disrupt Gulf Oil Shipments
Despite Monday’s price decline, risks to oil supplies remain elevated.
Analytics firm Kpler said crude flows through the Gulf fell sharply last week as attacks on commercial vessels intensified. A seven-day average dropped to about 8.5 million barrels per day, down from more than 20 million barrels per day the previous week.
Kpler reported at least 10 confirmed incidents involving commercial vessels during the week.
The attacks have heightened concerns over the safety of energy shipments and the potential for further disruption to global oil markets.
Egypt Offers Support to Saudi Arabia
Regional tensions also intensified as Egypt said it was ready to provide Saudi Arabia with the support needed to defend its security and stability against Yemen’s Iran-aligned Houthi movement.
The statement added to concerns that the conflict could widen and further threaten maritime routes and energy infrastructure across the region.
For oil traders, the market outlook now depends on two competing developments: the possibility of additional Russian fuel supplies following Washington’s decision and the risk of further disruptions to shipments from the Middle East.
