Oil Drops on Expectations of Increased Russian Fuel Supplies After Trump Exemption - Sarmad

Oil prices fell on Monday after US President Donald Trump exempted Russia from sanctions and tariffs that could have boosted Russian fuel exports.

Brent crude futures dropped $1.94, or 1.77 percent, to $107.92 per barrel by 0227 GMT, after closing on Friday at their highest level since May 19.

US West Texas Intermediate crude fell 83 cents, or 0.82 percent, to $100.58 per barrel, after closing on Friday at its highest level since September 17.

Trump signed an executive order on Friday exempting Russia from key sanctions and tariffs under the Graham-Leach-Bliley Act, which he signed last month at the request of lawmakers seeking to increase pressure on Moscow over its war in Ukraine.

However, Secretary of State Marco Rubio said the president would use a period of up to 60 days to assess the economic impact of the sanctions and tariffs on the global economy.

The move follows an agreement Trump reached with Russian President Vladimir Putin to export diesel to the United States and other countries, with initial volumes of around 2.3 million barrels this month before rising to approximately 7.6 million barrels monthly, according to Trump’s announcement. Ukrainian President Volodymyr Zelenskyy said these US measures would harm Ukraine.

Brent crude briefly touched $110 per barrel on Friday for the first time since May, as tensions and security threats in the Middle East raised concerns about navigation safety and tightened global energy supplies.

Tim Waterer, a market analyst at KCM Trade, said, “The combination of a softer tone on sanctions and some profit-taking after recent gains is helping to curb the near-term upward trend.”

He added that the US exemption from sanctions on Russia could lead to increased Russian fuel exports, but mixed messages have created uncertainty.

“Until the details and duration become clear, it is unlikely that the market will fully price in a sustained increase in supply,” he said.

In a Friday note, analysis firm Kpler said intensified attacks on commercial ships sharply reduced Gulf crude flows to an average of 8.5 million barrels per day over the past seven days, down from more than 20 million barrels per day in the previous week. It added that ten incidents were reported, confirming at least one involving commercial vessels last week.

Egypt stated it is ready to provide the support Saudi Arabia needs to defend its security and stability against Iran-backed Houthis in Yemen.