Oil Prices Fall From Five-Month High as US Eases Russia Sanctions

Oil prices fell by more than 2% on Monday after reaching a five-month high in the previous session, as investors took profits following US President Donald Trump’s decision to waive key sanctions and tariffs on Russia, raising the prospect of increased fuel supplies.

Brent crude futures dropped $2.29, or 2.08%, to $107.57 a barrel by 9:19 a.m. Saudi time. The benchmark had settled at its highest level since May 19 on Friday.

US West Texas Intermediate crude fell $1.95, or 1.92%, to $99.46 a barrel after closing at its highest level since September 17 in the previous session.

Trump signed an executive order on Friday waiving key sanctions and tariffs under the Graham Act, which he signed into law last month following pressure from lawmakers seeking to increase pressure on Moscow over its war in Ukraine.

However, US Secretary of State Marco Rubio said Trump would take up to 60 days to assess the measures’ impact on the global economy, adding uncertainty over how long the waivers would remain in effect.

“Trump’s move looks like another desperate attempt to keep oil prices in check ahead of the US midterm elections,” said Priyanka Sachdeva, head of market insight at Phillip Nova. She added that the decision did little to address physical supply disruptions in the Strait of Hormuz, where attacks on oil tankers continue.

Tim Waterer, chief analyst at KCM Trade, said the waiver could lead to higher Russian fuel exports, but mixed signals from Washington had left traders uncertain.

“Until the details and duration are clearer, the market is unlikely to fully price in a sustained increase in supply,” Waterer said.

The move follows a deal between Trump and Russian President Vladimir Putin to export diesel to the United States and other countries. Shipments are expected to start at around 2.3 million barrels this month before rising to approximately 7.6 million barrels a month. Ukrainian President Volodymyr Zelenskiy has warned that US actions would harm Ukraine.

Middle East Disruptions Tighten Oil Supplies

Brent briefly reached $110 a barrel on Friday for the first time since May, as escalating tensions and attacks on commercial vessels in the Middle East raised concerns about shipping security and global energy supplies.

According to analytics firm Kpler, Gulf crude flows fell to around 8.5 million barrels per day on a seven-day average last week, down from more than 20 million barrels per day the previous week. The firm reported at least 10 confirmed incidents involving commercial vessels during the week.

Egypt also said it was ready to provide Saudi Arabia with the support needed to defend its security and stability against Yemen’s Iran-aligned Houthis.

DBS expects oil prices to remain between $100 and $110 a barrel ahead of the US midterm elections, with regional tensions likely to keep fuel costs a concern for American voters.

Suvro Sarkar, DBS’s head of energy research, said Trump’s measures, including the Russian sanctions waivers, were short-term responses that would have little lasting impact on the underlying supply situation.