Oil prices declined on Monday after US President Donald Trump signed an executive order waiving new sanctions and tariffs targeting Russia, raising expectations of improved global energy supplies.
However, crude oil recovered part of its earlier losses as investors continued to assess supply disruptions in the Middle East and ongoing geopolitical uncertainty.
At 09:36 ET (13:36 GMT), Brent crude futures fell 2% to $107.73 per barrel, while US West Texas Intermediate (WTI) futures declined 1.1% to $100.32.
The pullback followed a strong performance during the previous week, when crude oil prices surged nearly 5% amid persistent supply disruptions and escalating tensions across major energy-producing regions.
Trump Waives Russia Sanctions as Oil Prices Retreat
President Donald Trump signed an executive order on Friday suspending several new sanctions and tariffs against Russia shortly before they were scheduled to take effect.
The decision also waived proposed tariffs targeting countries that continue importing Russian oil.
According to Trump, the temporary exemptions serve US national interests, particularly as the administration seeks to address rising energy costs and encourage diplomatic negotiations.
The announcement followed a recent agreement between Washington and Moscow involving Russian diesel imports.
Trump has also criticized Ukrainian attacks on Russian energy facilities, arguing that disruptions to infrastructure have contributed to higher international fuel prices.
Over the weekend, the US president indicated through social media that negotiations aimed at ending the Russia-Ukraine war were underway.
He emphasized the importance of keeping Moscow involved in diplomatic discussions rather than introducing additional measures that could discourage participation.
The Russia sanctions waiver has raised expectations that additional Russian petroleum products could reach international markets, potentially easing some of the supply pressures supporting elevated crude oil prices.
However, existing sanctions imposed under separate authorities remain in place.
Trump’s Russia Decision Faces Political Backlash
The administration’s decision has attracted criticism from European officials and lawmakers from both major US political parties.
Critics argue that easing pressure on Moscow could weaken international efforts to influence Russia’s actions in Ukraine.
Ukrainian authorities have also expressed dissatisfaction with the growing energy cooperation between Washington and Moscow.
Meanwhile, Kyiv has indicated that it intends to continue targeting Russian infrastructure despite the latest diplomatic developments.
The sanctions waiver comes as Trump faces increasing domestic pressure over elevated gasoline and diesel prices.
Higher energy costs have become a significant political concern ahead of the November US midterm elections, potentially affecting the Republican Party’s electoral prospects.
However, some analysts question whether easing Russian energy restrictions will meaningfully reduce fuel prices.
They argue that the broader energy supply crisis stems largely from disruptions associated with the Middle East conflict, particularly restrictions affecting oil shipments from the Persian Gulf.
China’s Economic Growth Provides Limited Support for Crude Oil
Positive economic data from China offered some support to energy markets, although it was insufficient to prevent Monday’s decline.
The world’s largest crude oil importer reported stronger-than-expected economic growth during the third quarter.
China’s gross domestic product expanded slightly faster than economists had anticipated, suggesting that parts of the economy remain resilient despite ongoing challenges.
Separate figures also showed that Chinese refinery processing activity increased for a third consecutive month in September.
The improvement was driven primarily by stronger exports of refined petroleum products.
Higher refinery throughput can support crude oil demand because refineries require additional supplies to maintain production.
Nevertheless, the positive Chinese data had a relatively limited impact on oil prices as traders focused on the potential increase in Russian energy exports.
ANZ Warns Global Oil Supply Constraints Remain Critical
Analysts at ANZ highlighted that global demand for oil has remained relatively resilient despite the sharp increase in energy prices over recent months.
According to the bank, the central challenge facing the energy market is increasingly related to the ability of international supply chains to deliver refined petroleum products efficiently.
Shipping disruptions, logistical bottlenecks and limited refining capacity can restrict fuel availability even when underlying demand remains healthy.
ANZ suggested that a significant potential driver of oil demand growth in 2027 could be the removal of existing supply constraints rather than an acceleration in global economic activity.
In other words, improvements in energy transportation and distribution networks could allow previously constrained consumption to recover.
This outlook highlights the importance of global supply infrastructure alongside traditional economic indicators when evaluating future crude oil demand.
Iran Offers to Reopen Strait of Hormuz Amid Supply Crisis
Geopolitical tensions in the Middle East remain another major factor influencing global oil prices.
Iranian Foreign Minister Abbas Araqchi said on Sunday that Tehran’s proposal to reopen the Strait of Hormuz within seven days remains available to the United States.
Araqchi criticized Washington for failing to accept the proposal, maintaining that a path toward reopening the strategic shipping route already exists.
The Strait of Hormuz is one of the world’s most important maritime energy corridors, normally handling approximately 20% of global petroleum flows.
Disruptions to shipping through the waterway have severely affected international oil supplies, with Asian importers experiencing particularly significant consequences.
Although tanker movements showed temporary signs of recovery in September, renewed Iranian attacks on vessels traveling through the strait interrupted the improvement.
Consequently, energy markets continue to face uncertainty over when normal shipping operations might resume.
Middle East Conflict Keeps Oil Supply Risks Elevated
Additional tensions involving Saudi Arabia and Yemen’s Iran-backed Houthi movement have increased concerns about regional energy security.
Continued military confrontations threaten infrastructure and shipping routes used to transport crude oil and refined petroleum products.
Recent maritime data indicated that oil flows from the Persian Gulf improved during the second week of October.
However, transportation conditions remain fragile, with the possibility of further disruptions continuing to influence market sentiment.
These risks have helped support crude oil prices despite the latest US decision to ease certain restrictions affecting Russia.
Looking ahead, oil prices will likely remain sensitive to developments involving Russian energy exports, the Strait of Hormuz and broader Middle East tensions.
While Trump’s sanctions waiver could improve expectations for global fuel availability, continued geopolitical instability may limit the extent of any sustained decline in crude oil prices.
