Oil prices edged lower on Monday after US President Donald Trump moved to ease restrictions on Russian oil, raising hopes of additional supply reaching global markets. However, escalating attacks across the Middle East continued to cloud the outlook for energy flows, limiting the relief.
Brent crude futures fell 1.21% to $108.52 a barrel, while West Texas Intermediate (WTI) crude slipped 0.13% to $101.30 early on Monday.
The retreat followed a strong run last week, when Brent reached a five-month high on Friday and WTI finished at its highest level since September. Both benchmarks remain elevated as traders weigh the potential benefits of sanctions relief against persistent risks to production and transportation.
Trump’s move raises hopes for more supply
Trump signed an executive order on Friday waiving key sanctions and tariffs on Russia that had been scheduled to take effect this week.
Secretary of State Marco Rubio said the administration would take up to 60 days to assess the potential impact of the restrictions on the American and global economies.
The latest action follows an earlier decision by Washington to waive sanctions on Russian diesel exports through April 2027. Together, the measures could help improve the availability of refined fuels and ease some of the pressure on energy prices.
The moves also come ahead of the November 3 midterm elections, with high diesel prices emerging as a significant concern for the administration.
However, the prospect of additional Russian supplies has yet to remove the broader risks facing the market.
Ongoing conflicts in Russia and in the Middle East continue to complicate energy shipments, with attacks on commercial vessels adding to transportation costs and uncertainty.
Middle East attacks disrupt flows
Supply concerns have intensified following a sharp increase in attacks around the Gulf over the past week.
Data from analytics firm Kpler showed that average crude flows through the Gulf fell to approximately 8.5 million barrels per day last week, measured on a seven-day rolling basis, from more than 20 million barrels per day in the preceding week.
Kpler recorded 10 attack incidents during the week, highlighting the scale of the disruption to commercial shipping.
Iran has intensified attacks on tankers in nearby waters as it seeks to restrict crude exports from the region. The continuing confrontation has raised concerns that further incidents could interrupt shipments and tighten global supplies.
The conflict between Saudi Arabia and Yemen’s Houthi militants presents another threat to regional energy infrastructure and transportation routes.
In Russia, a series of Ukrainian drone attacks set an oil terminal and depot in St. Petersburg on fire. The terminal handles exports of about 120,000 barrels per day of refined petroleum products, according to Kpler.
These developments have reinforced concerns that any additional supply made available through sanctions relief could be offset by disruptions elsewhere.
Oil may remain above $100 through midterms
Analysts expect geopolitical risks to keep crude prices elevated in the near term, with the potential for further disruptions outweighing the immediate benefits of measures aimed at improving supply.
DBS expects oil prices to remain within a range of $100 to $110 a barrel as the US approaches the midterm elections.
Suvro Sarkar, head of energy research at DBS, told Reuters that the administration’s measures were unlikely to resolve the underlying supply constraints.
He argued that waivers on Russian sanctions and other interventions would offer only temporary relief, with limited structural impact on the supply outlook.
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