Oil prices fell on Monday as investors took profits following last week’s multi-month highs. Markets also assessed Donald Trump’s decision to ease some sanctions and tariffs affecting Russian exports, while disruptions around the Strait of Hormuz continued to restrict Gulf crude shipments.
Brent crude dropped $1.72, or 1.6%, to $108.14 a barrel by 10:27 a.m. ET. U.S. West Texas Intermediate crude fell 87 cents, or 0.86%, to $100.54 a barrel.
Oil markets weigh increased Russian fuel supplies against disruptions to shipping through the Strait of Hormuz
The decline followed Trump’s Friday executive order waiving some sanctions and tariffs tied to Russian exports. The move came after Trump announced an arrangement involving Russian diesel exports to the United States and his discussions with Russian President Vladimir Putin.
Under the reported arrangement, exports would begin at about 2.3 million barrels this month before rising to approximately 7.6 million barrels per month. Secretary of State Marco Rubio said Trump would take up to 60 days to evaluate how the sanctions and tariffs affected the global economy.
However, uncertainty in the Middle East continued to support high oil prices. UBS analyst Giovanni Staunovo pointed to attacks on vessels passing through the Strait of Hormuz and disruptions to crude flows.
Shipping through the key route had already dropped sharply. Kpler reported that Gulf crude flows averaged about 8.5 million barrels per day over seven days last week, compared with more than 20 million barrels per day the previous week. The analytics firm also recorded at least 10 confirmed incidents involving commercial vessels.
Tensions intensified again on Sunday when an oil tanker caught fire. It exploded after hitting a naval mine in the southern Strait of Hormuz, according to Iran’s Islamic Revolutionary Guard Corps, as cited by Iranian media.
Elsewhere in the region, Saudi Arabia issued several danger alerts on Monday before later saying the threat had passed. The warnings followed a Houthi attack on a Yemeni government security force training camp in Shabwa province. The attack killed 53 people and injured 200, according to the supplied source.
Priyanka Sachdeva of Phillip Nova argued that Trump’s sanctions move would do little to solve the physical supply problems affecting Hormuz. Meanwhile, OPEC production increased in September, with Saudi Arabia and Iraq leading the gains, according to a Reuters survey.
The market therefore faced competing pressures. Additional Russian diesel supplies and higher OPEC output could ease some supply concerns. Meanwhile, continued disruptions around Hormuz kept significant risks hanging over global oil flows.
