Oil prices declined on Monday after US President Donald Trump issued an executive order suspending numerous sanctions against Russia and waiving proposed tariffs on countries importing Russian oil. The decision raised expectations that additional Russian crude could remain available to international markets.
Brent crude futures fell 2.06% to $107.60 per barrel at 02:00 ET (06:00 GMT), while US West Texas Intermediate (WTI) futures declined 1.6% to $99.80 per barrel.
The declines followed a rise of nearly 5% in crude prices during the previous week, when disruptions to global energy supplies, particularly in the Middle East, had supported the market.
Investors were also monitoring developments in the Strait of Hormuz, where restrictions on shipping continued to affect oil deliveries.
Trump Announces Waivers on Russian Oil Sanctions
Trump signed an executive order on Friday evening suspending a series of sanctions against Russia shortly before they were scheduled to take effect.
The administration also waived proposed tariffs on countries purchasing Russian oil.
The president described the decision as being in the national interest of the United States.
The announcement followed a diesel import agreement with Russia signed the previous week. Trump had also attributed part of the increase in global fuel prices to Ukrainian attacks on Russian energy facilities.
In a social media post, Trump said he was pursuing negotiations aimed at ending the Russia-Ukraine war and did not want measures that would “drive… Russia away from the bargaining table.”
The president also reiterated criticism of Ukrainian President Volodymyr Zelensky.
Ukraine indicated late last week that it intended to continue targeting Russian infrastructure, while expressing dissatisfaction with further agreements between Washington and Moscow.
Sanctions Decision Draws Political Criticism
The US decision attracted criticism from European officials and lawmakers from both major American political parties.
The waiver comes as the Trump administration faces higher domestic fuel prices ahead of the US midterm elections.
Rising petrol and diesel costs have become an economic and political consideration, given their effects on household expenditure and business operating costs.
Critics of the administration have argued that US military action against Iran contributed substantially to the current disruption of global oil supplies.
The conflict has affected energy shipments from the Middle East, particularly through the Strait of Hormuz.
The decision to ease restrictions on Russian energy transactions is being assessed for its potential impact on international crude availability and fuel prices.
ANZ Highlights Constraints on Global Fuel Distribution
Analysts at ANZ said the availability and transportation of refined petroleum products had become increasingly important factors in assessing the global oil market.
“The key question is no longer whether the global economy can generate fuel demand, but whether the global supply chain can efficiently deliver refined products to end-users,” the analysts wrote.
ANZ noted that global oil demand had remained relatively resilient in recent months despite substantial increases in prices.
The bank suggested that supply chain disruptions could be limiting consumption independently of underlying economic activity.
“The largest upside risk to oil demand in 2027 is therefore not necessarily stronger GDP growth but the easing of constraints that are currently suppressing consumption,” ANZ added.
The assessment indicates that improvements in transportation and fuel distribution could influence future consumption even without a corresponding acceleration in economic growth.
Iran Maintains Proposal to Reopen Strait of Hormuz
Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran’s proposal to reopen the Strait of Hormuz within seven days remained available to the United States.
“The way to reopening the Strait of Hormuz is obvious,” Araqchi told Iranian media, criticising Washington for not accepting the proposal.
The closure of the waterway has disrupted approximately 20% of global oil supplies, with Asian importing countries particularly affected.
Shipping activity through the strait briefly improved in September before renewed attacks on vessels disrupted movements again.
The Strait of Hormuz remains an important route for oil shipments from major Middle Eastern producers to international markets.
The duration of the restrictions and the possibility of renewed shipping activity remain significant considerations for global energy supply.
Regional Conflict Continues to Affect Oil Shipments
Tensions elsewhere in the Middle East have added to uncertainty over regional oil exports.
Saudi Arabia and Yemen’s Iran-backed Houthi movement have continued to clash, creating additional risks for energy infrastructure and maritime transportation.
Recent shipping data indicated that oil flows from the Persian Gulf improved during the second week of October.
However, transportation conditions remained uncertain, with continuing security concerns affecting shipping operations.
Market participants are monitoring whether the improvement in cargo movements can be sustained.
Chinese Economic Data Provides Limited Support
Economic data from China offered some support to oil demand expectations, although it did not prevent Monday’s decline in crude prices.
China, the world’s largest crude oil importer, reported third-quarter gross domestic product growth that exceeded market forecasts.
Separate figures showed that Chinese refinery throughput increased for a third consecutive month in September.
The increase was supported primarily by higher exports of refined petroleum products.
The data provided additional information about industrial activity and fuel processing in China, but concerns about global supply conditions remained the main influence on oil prices during the session.
Oil Markets Assess Russian Exports and Middle East Disruptions
Oil prices began the week lower as investors considered the implications of the US decision to suspend Russian sanctions and tariffs.
Brent futures traded at $107.60 per barrel, while WTI stood at $99.80, reversing part of the previous week’s gains.
The potential availability of additional Russian oil has influenced supply expectations, while continuing restrictions on shipping through the Strait of Hormuz remain a source of uncertainty.
Developments in US-Russia relations, negotiations involving Iran and shipping conditions across the Middle East will remain relevant to the outlook for global crude and refined fuel markets.