Oil prices retreated from a five-month high following the granting of exemptions from sanctions imposed on Russia
Trump signed an executive order lifting sanctions and tariffs on Russia, fueling expectations that fuel exports from Russia could increase. Following this development, investors engaged in profit-taking, causing oil prices to pull back from the five-month peak they had reached.
Brent crude futures, which closed on Friday at their highest level since May 19, fell by $2.29 (2.08%) to $107.57 per barrel as of GMT 06:19.
West Texas Intermediate (WTI) crude, which closed on Friday at its highest level since September 17, dropped by $1.95 (1.92%) to $99.46 per barrel.
With the executive order signed on Friday, Trump lifted critical sanctions and tariffs that had been enacted into law last month, a measure known as the "Graham Act." That legislation had been introduced with the intent of exerting pressure on Moscow over the war in Ukraine.
However, it was stated that the President would utilize a period of up to 60 days to evaluate the impact of these sanctions and tariffs on the global economy.
This move by Trump appears to be an effort to keep oil prices under control ahead of the U.S. midterm elections. Admittedly, this step is unlikely to help resolve physical supply disruptions in the Strait of Hormuz, where attacks on oil tankers continue.
While the lifting of U.S. sanctions on Russia would pave the way for increased fuel exports from that country, the conflicting messages being sent maintain a sense of uncertainty; consequently, it is unlikely that the market will fully price in an expectation of a sustained increase in supply.
This move follows an agreement reached between Trump and Putin regarding the export of diesel to the United States and other nations. Under the terms of this agreement, shipments, which amount to approximately 2.3 million barrels this month, are expected to rise to roughly 7.6 million barrels per month in the future.
Zelenskyy stated that these actions by the U.S. would be detrimental to Ukraine.
As tensions and security threats in the Middle East fuel concerns regarding the safety of maritime transport and spark fears of a tightening in global energy supplies, the price of a barrel of Brent crude reached $110 on Friday, the first time it has hit that level since May.
Data indicates a sharp decline in crude oil shipments from the Gulf region; while volumes exceeded 20 million barrels per day the previous week, the seven-day average for last week fell to approximately 8.5 million barrels per day.
In a development that could further escalate tensions in the Middle East, Egypt has announced its readiness to support Saudi Arabia in its conflict against the Houthis.
All the measures Trump has implemented, including exemptions from sanctions against Russia, are merely short-term solutions and are unlikely to have any structural impact on the supply situation.
Related Articles
Brent crude oil is hovering near a five-month high, driven by tensions surrounding attacks by the Houthis and reports of incidents in the Gulf
Oil prices rose as concerns over supply were compounded by a decline in U.S. inventories
Oil reached $110 per barrel amid concerns that escalating tensions in the Middle East could further constrain supply
