Oil prices declined sharply on Monday after US President Donald Trump announced measures to suspend numerous sanctions and tariffs targeting Russia, raising expectations that additional Russian energy supplies could reach global markets.
Brent crude futures dropped 2.06% to $107.60 per barrel by 02:00 ET (06:00 GMT). Meanwhile, West Texas Intermediate (WTI) crude futures fell 1.6% to $99.80 per barrel.
The decline followed a strong performance during the previous week, when crude oil prices surged nearly 5% amid persistent supply disruptions, particularly in the Middle East.
However, hopes of improved Russian oil availability outweighed concerns about ongoing geopolitical tensions and shipping restrictions.
Oil Prices Fall as Trump Suspends Russia Sanctions
President Donald Trump signed an executive order on Friday evening suspending several sanctions against Russia shortly before they were scheduled to take effect.
The US administration also waived proposed tariffs on countries purchasing Russian oil, potentially easing restrictions on international energy trade.
Trump justified the decision by citing US national interests, signaling a shift in Washington’s approach toward Russian energy exports.
The announcement followed an agreement signed a week earlier concerning US diesel imports from Russia.
At the time, Trump criticized Ukrainian attacks on Russian energy infrastructure, arguing that these operations had contributed to rising global fuel prices.
The president also indicated through social media that his administration was pursuing negotiations aimed at ending the Russia-Ukraine conflict.
According to Trump, introducing additional restrictions against Moscow could undermine diplomatic efforts by discouraging Russia from participating in peace negotiations.
Russia Sanctions Waiver Sparks Political Criticism
The decision to ease restrictions on Russia attracted criticism from European officials and US lawmakers, including members of both major political parties.
Trump also renewed his criticism of Ukrainian President Volodymyr Zelensky as disagreements surrounding the conflict continued.
Meanwhile, Ukraine indicated late last week that it intended to maintain military operations targeting Russian infrastructure.
Ukrainian officials also expressed dissatisfaction with growing cooperation between Washington and Moscow.
Domestically, the Trump administration faces mounting pressure over elevated fuel costs, which could influence voter sentiment ahead of the upcoming US midterm elections.
Critics of the administration argue that the ongoing energy crisis has been driven primarily by the US conflict with Iran, which has severely disrupted oil supplies from the Middle East.
Consequently, the latest policy changes have intensified debate over the relationship between geopolitical decisions, energy security and domestic fuel prices.
Stronger China GDP Offers Limited Support to Crude Oil
Positive economic data from China provided some support to oil markets, although it was insufficient to prevent Monday’s decline.
China, the world’s largest crude oil importer, reported stronger-than-expected economic growth during the third quarter.
The improvement suggested that economic activity remained relatively resilient despite broader global uncertainty.
Furthermore, separate figures showed that Chinese refinery throughput increased for the third consecutive month in September.
Rising exports were the primary driver behind the latest increase in refinery activity.
Nevertheless, the prospect of additional Russian oil supplies remained the dominant influence on crude prices, overshadowing encouraging demand indicators from China.
ANZ Analysts Highlight Global Oil Supply Constraints
Analysts at ANZ emphasized that disruptions in global energy distribution remain a significant challenge for oil markets.
According to the bank, recent developments suggest that the central issue is not necessarily insufficient demand for petroleum products.
Instead, supply chain restrictions and difficulties delivering refined fuels to consumers have become increasingly important.
Despite elevated crude prices, global oil demand has remained relatively resilient in recent months.
ANZ analysts also suggested that the biggest potential improvement in oil consumption during 2027 could come from easing existing supply and distribution constraints rather than stronger economic growth alone.
This assessment highlights the importance of restoring disrupted shipping routes and improving the availability of refined petroleum products.
As a result, geopolitical developments affecting energy transportation infrastructure could play a major role in determining future oil market conditions.
Iran Reiterates Proposal to Reopen Strait of Hormuz
Meanwhile, Iran renewed its offer to reopen the Strait of Hormuz, a strategically important shipping route for international energy supplies.
Iranian Foreign Minister Abbas Araqchi told domestic media on Sunday that Tehran’s proposal to restore access within seven days remained available to Washington.
Araqchi maintained that the requirements for reopening the waterway were clear, while criticizing the United States for failing to accept Iran’s proposal.
The continued closure of the Strait of Hormuz has created substantial disruptions across global energy markets.
Before the conflict, approximately 20% of the world’s oil supplies passed through the narrow shipping corridor.
Asian economies have been particularly vulnerable to these disruptions because of their dependence on Middle Eastern energy exports.
Although shipping activity showed signs of recovering during September, renewed Iranian attacks on vessels reportedly interrupted traffic and reduced oil flows once again.
Middle East Tensions Continue to Threaten Oil Supplies
Beyond the Strait of Hormuz, ongoing hostilities involving Saudi Arabia and Yemen’s Iran-backed Houthi movement have added further uncertainty to regional energy supplies.
The continued conflict raises concerns about the security of shipping routes and the reliability of oil exports from the Middle East.
Recent maritime transportation data indicated that oil shipments from the Persian Gulf improved during the second week of October.
However, overall shipping conditions remained fragile, with regional tensions continuing to threaten the recovery.
A sustained reopening of the Strait of Hormuz could help restore energy shipments and ease pressure on global crude prices.
Nevertheless, any meaningful improvement would depend on the stability of shipping operations and progress toward reducing regional hostilities.
Oil Market Outlook: Russian Supply and Hormuz Remain Key Factors
Looking ahead, oil traders will closely monitor the impact of Trump’s Russia sanctions waiver, developments in US-Iran negotiations and the recovery of shipping activity through the Strait of Hormuz.
The possibility of increased Russian energy exports could place additional downward pressure on crude oil prices.
However, persistent geopolitical risks and disruptions to Middle Eastern supplies may continue providing support.
Meanwhile, resilient global oil demand and improving Chinese refinery activity could help offset some of the bearish pressure from expectations of greater supply.
Ultimately, the direction of Brent and WTI crude will depend heavily on whether international energy supplies can recover sustainably while geopolitical tensions remain elevated.
