Oil prices fell on Monday after reaching a five-month high, as investors booked profits following a recent rise in prices. US President Donald Trump’s decision to ease some sanctions and tariffs on Russia also weighed on prices, as it could allow more Russian fuel to enter the global market.
Brent crude futures fell by $2.29, or 2.08%, to $107.57 per barrel by 0619 GMT on Monday. The benchmark had settled at its highest level since May 19 on Friday, Reuters reported.
Oil prices today
US West Texas Intermediate (WTI) crude futures dropped by $1.95, or 1.92%, to $99.46 per barrel. WTI had closed at its highest level since September 17 on Friday.
Trump signed an executive order on Friday to waive key sanctions and tariffs under a law known as the Graham Act. Trump had signed the law last month after lawmakers urged him to put pressure on Moscow over its war in Ukraine.
However, the impact of the move on the global economy remains uncertain. US Secretary of State Marco Rubio said Trump would take up to 60 days to assess the effects of the sanctions and tariff waivers on the global economy.
Priyanka Sachdeva, head of market insight at Phillip Nova, said Trump’s decision appeared to be another attempt to control oil prices ahead of the US midterm elections. She added that the move would do little to solve actual supply disruptions in the Strait of Hormuz, where attacks on oil tankers continue, Reuters reported.
Also read: Elon Musk plans to give SpaceX shares worth $10.5 billion to US children in 2027
Trump eases Russia sanctions
Tim Waterer, chief analyst at KCM Trade, said the US decision to ease Russian sanctions could lead to higher Russian fuel exports. However, he added that mixed messages from the US government had created uncertainty in the market.
Waterer said oil traders were unlikely to fully account for a lasting increase in global supply until the details and duration of the US waiver became clearer, Reuters reported.
The waiver follows a deal between Trump and Russian President Vladimir Putin to export Russian diesel to the United States and other countries. Exports are expected to begin at around 2.3 million barrels this month before increasing to approximately 7.6 million barrels per month. Ukrainian President Volodymyr Zelenskiy said the US actions would hurt Ukraine.
Middle East oil supply fears
Despite Monday’s decline, oil prices remain under pressure from supply fears linked to rising tensions and security threats in the Middle East. Brent crude briefly touched $110 per barrel on Friday, reaching that level for the first time since May, as concerns grew over the safety of shipping and the possibility of tighter global energy supplies, Reuters reported.
Attacks on commercial vessels in the Middle East have sharply reduced crude oil shipments from the Gulf. According to analytics firm Kpler, average crude oil flows from the region over seven days fell to around 8.5 million barrels per day last week, compared with more than 20 million barrels per day the previous week.
Kpler also reported at least 10 confirmed incidents involving commercial vessels during the previous week, highlighting the growing risks to oil shipments from the region.
Also read: Bitcoin rebounds above $82,000 as oil prices fall and risk appetite improves
Regional tensions could increase further as countries prepare for possible security threats. Egypt said it was ready to provide Saudi Arabia with the support needed to protect its security and stability against Yemen’s Iran-allied Houthi group, Reuters reported.
Oil price outlook ahead of US midterms
DBS expects oil prices to remain between $100 and $110 per barrel as the US midterm elections approach. The bank said Iran and its allies could keep oil prices and domestic fuel costs high on the list of concerns for American voters.
Suvro Sarkar, head of energy research at DBS, said the US president was trying different measures to push oil prices lower ahead of the midterm elections without making any direct concessions to Iran, Reuters reported.
Sarkar added that the measures taken by the US government, including waivers on Russian sanctions, were short-term solutions. He said they would have little lasting impact on the underlying global oil supply situation.
Overall, oil prices have fallen from their five-month highs as Trump’s move to ease Russian sanctions raises the possibility of increased fuel supplies. However, continued attacks on commercial vessels, falling Gulf oil shipments and uncertainty over the Middle East conflict are limiting the chances of a sustained decline in prices.