US President Donald Trump’s decision to ease some sanctions and tariffs on Russia also weighed on prices, as it could allow more Russian fuel to enter the global market. Oil prices fell on Monday after reaching a five-month high, as investors booked profits following a recent rise in prices.
US Secretary of State Marco Rubio said Trump would take up to 60 days to assess the effects of the sanctions and tariff waivers on the global economy. Trump had signed the law last month after lawmakers urged him to put pressure on Moscow over its war in Ukraine. She added that the move would do little to solve actual supply disruptions in the Strait of Hormuz, where attacks on oil tankers continue, Reuters reported.
Priyanka Sachdeva, head of market insight at Phillip Nova, said Trump’s decision appeared to be another attempt to control oil prices ahead of the US midterm elections. However, the impact of the move on the global economy remains uncertain. Trump signed an executive order on Friday to waive key sanctions and tariffs under a law known as the Graham Act.
Tim Waterer, chief analyst at KCM Trade, said the US decision to ease Russian sanctions could lead to higher Russian fuel exports. He said they would have little lasting impact on the underlying global oil supply situation. However, he added that mixed messages from the US government had created uncertainty in the market. Sarkar added that the measures taken by the US government, including waivers on Russian sanctions, were short-term solutions.
Exports are expected to begin at around 2.3 million barrels this month before increasing to approximately 7.6 million barrels per month. Suvro Sarkar, head of energy research at DBS, said the US president was trying different measures to push oil prices lower ahead of the midterm elections without making any direct concessions to Iran, Reuters reported.
Ukrainian President Volodymyr Zelenskiy said the US actions would hurt Ukraine. The waiver follows a deal between Trump and Russian President Vladimir Putin to export Russian diesel to the United States and other countries.
