Oil prices fell by more than two per cent on Monday as investors took profits after crude benchmarks reached multi-month highs, while US President Donald Trump’s decision to waive sanctions and tariffs on Russia raised the prospect of increased fuel supplies.
Brent crude futures dropped by $2.29, or 2.08 per cent, to $107.57 a barrel by 0619 GMT, after settling at their highest level since May 19 on Friday.
US West Texas Intermediate (WTI) crude fell by $1.95, or 1.92 per cent, to $99.46 a barrel, following its highest close since September 17.
Trump signed an executive order on Friday waiving key sanctions and tariffs under the Graham Act, which he signed last month following calls from lawmakers seeking to pressure Moscow over its war in Ukraine.
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However, US Secretary of State Marco Rubio said the president would take up to 60 days to assess the measures’ impact on the global economy.
Priyanka Sachdeva, head of market insight at Phillip Nova, said Trump’s move appeared aimed at containing oil prices ahead of the US midterm elections.
She added that the decision did little to address physical supply disruptions in the Strait of Hormuz, where attacks on oil tankers have continued.
Tim Waterer, chief analyst at KCM Trade, said the waiver could lead to increased Russian fuel exports, but uncertainty remained over its scope and duration.
“Until the details and duration are clearer, the market is unlikely to fully price in a sustained increase in supply,” he said.
The waiver followed an agreement between Trump and Russian President Vladimir Putin to export diesel to the United States and other countries, beginning with about 2.3 million barrels this month before rising to approximately 7.6 million barrels monthly.
Ukrainian President Volodymyr Zelenskiy said the US actions would hurt Ukraine.
Middle East Supply Disruptions Support Prices
Despite Monday’s decline, oil prices remain elevated amid security threats in the Middle East and concerns over global supply disruptions.
Brent crude briefly reached $110 a barrel on Friday for the first time since May, as tensions in the region heightened concerns about shipping security and the availability of crude supplies.
Analytics firm Kpler said attacks on commercial vessels had sharply reduced Gulf crude flows to an average of about 8.5 million barrels per day over seven days last week, down from 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.
Tensions have also raised concerns about a broader regional conflict, with Egypt saying it was ready to provide Saudi Arabia with the support needed to protect its security and stability against Yemen’s Iran-aligned Houthis.
DBS expects oil prices to remain within the $100 to $110-a-barrel range ahead of the US midterm elections, as tensions involving Iran and its regional allies keep energy costs in focus.
Suvro Sarkar, DBS’s head of energy research, said the US president was attempting to contain oil prices without making direct concessions to Iran.
He described the measures, including the waiver of Russian sanctions, as short-term fixes unlikely to have a significant structural impact on global oil supplies.
