Oil prices slipped from a five month high on Monday as investors took profits after President Donald Trump waived sanctions and tariffs on Russia in a move that may lead to more Russian fuel exports. Brent crude futures fell 2.29 dollars, or 2.08 percent, to 107.57 dollars a barrel by 09:19 Saudi time, after settling on Friday at their highest since May 19. US West Texas Intermediate was at 99.46 dollars, down 1.95 dollars, or 1.92 percent, after closing at its highest since September 17. Friday’s settlements in the market tables were lower on the day, Brent at 108.33 dollars, down 1.39 percent, and WTI at 97.99 dollars, down 3.37 percent, with Brent briefly touching 110 dollars intraday on Friday for the first time since May.
Trump signed an executive order on Friday waiving key sanctions and tariffs under the Graham Act, the law he signed last month at the urging of lawmakers who wanted to pressure Moscow over its war in Ukraine. Secretary of State Marco Rubio said the president will use up to 60 days to assess the impact of the sanctions and tariffs on the global economy. The waiver follows the deal Trump struck with Russian President Vladimir Putin to export diesel to the United States and other countries, starting at about 2.3 million barrels this month before rising to about 7.6 million barrels a month. OilPrice reported the same initial volume, with the 7.6 million barrels to follow in November and the following months, and noted that analysts regard the volumes as too small to change the global diesel balance on their own.
The physical market points the other way from the futures dip. Intensified attacks on commercial vessels cut Gulf crude flows sharply to about 8.5 million barrels a day on a seven day average last week from more than 20 million barrels a day the week before, analytics firm Kpler said in a note on Friday, with at least 10 confirmed incidents involving commercial vessels reported last week. Both reports carried the Kpler figure.
Analysts quoted in the reporting treated the waiver as a price management step rather than a supply solution. Priyanka Sachdeva, head of market insight at Phillip Nova, called it an attempt to keep oil prices in check ahead of the US midterm elections that does little to address the physical disruption in the Strait of Hormuz. KCM Trade chief analyst Tim Waterer said the mixed messaging around the waiver has created uncertainty and that the market is unlikely to fully price in a sustained increase in supply until the details and duration are clearer. DBS expects prices to remain rangebound between 100 and 110 dollars a barrel going into the midterms.