Oil slips from 5-month high as Trump's Russia sanctions waiver may bring more supplies

SINGAPORE: Oil prices slipped from a five-month high on Monday as investors took profits after US President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports.

Brent crude futures fell $2.29, or 2.08%, to $107.57 a barrel by 0619 GMT after settling at its highest since May 19 on Friday.

US West Texas Intermediate crude was at $99.46 a barrel, down $1.95, or 1.92%, after closing at its highest since September 17 on Friday.

Trump signed an executive order on Friday waiving key sanctions and tariffs under the law known as the Graham Act, which he signed last month at the urging of lawmakers who wanted to pressure Moscow over its war in Ukraine.

However, 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.

“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, adding that it does little to address the physical supply disruptions in the Strait of Hormuz, where oil tanker attacks continue.

KCM Trade chief analyst Tim Waterer said while the US waiver on Russian sanctions could lead to higher Russian fuel exports, the mixed messaging has created uncertainty.

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

The waiver comes after Trump struck a deal 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 monthly. Ukrainian President Volodymyr Zelenskiy said these US actions will hurt Ukraine.  

Middle east crude exports fall sharply

Brent crude oil briefly touched $110 a barrel on Friday for the first time since May as tensions and security threats in the Middle East raised concerns over the safety of shipping and tighter global energy supplies.

Intensified attacks on commercial vessels cut Gulf crude flows sharply to about 8.5 million barrels per day on a seven-day average last week from more than 20 million bpd the week before, analytics firm Kpler said in a note on Friday.

At least 10 confirmed incidents involving commercial vessels were reported last week, it added.

Potentially raising the stakes in the Middle East war, Egypt said it is ready to provide Saudi Arabia with the support it needs to defend its security and stability against Yemen’s Houthis.

IEA suggests members assess need for more diesel releases

DBS expects oil prices to remain rangebound in the $100 to $110 a barrel range going into the US midterms as Iran and its proxies would ensure oil prices and domestic fuel prices remain the key irritant for US voters.

“The US president is trying various moves to suppress prices ahead of the midterms without any direct concession to Iran,” its head of energy research Suvro Sarkar said.

“However, all the levers he has pulled – including waivers on Russia sanctions – are short-term fixes and will have barely any structural impact on the supply situation.”