Written by: Fatma Younes
Oil prices recorded a notable decline during recent trading, moving away from their five-month highs, following US President Donald Trump's decision to ease some sanctions and tariffs imposed on Russia. This move came as an attempt by the US administration to boost global fuel flows and control high price levels.
The impact of easing on the energy market
Brent crude contracts fell to $107.88 per barrel, after having previously hit their highest level since last May. US West Texas Intermediate (WTI) crude prices also declined, settling at $100.25 per barrel. This move comes under an executive order issued by Trump to suspend some provisions of the "Graham" Act, which aimed to exert pressure on Moscow regarding the conflict in Ukraine.
Current data indicates an agreement between the US administration and Russian President Vladimir Putin that includes exporting quantities of Russian diesel to the United States and other countries, with these shipments expected to start at about 2.3 million barrels per month, with plans to gradually increase them to about 7.6 million barrels per month.
Supply pressures and geopolitical tensions
Despite this decision, markets are still in a state of caution and anticipation, especially in light of continued logistical challenges in the Middle East. Increasing attacks on merchant ships in the region have led to a sharp drop in crude oil flows through the Gulf, with Kpler estimates indicating that flows have fallen to about 8.5 million barrels per day, compared to more than 20 million barrels in previous weeks.
Analysts believe that these US steps may be driven by efforts to control fuel price inflation ahead of the US midterm elections, but the effectiveness of this move remains a subject of debate, especially with concerns remaining about the stability of global supply chains and rising tensions in the Strait of Hormuz region.
For his part, US Secretary of State Marco Rubio confirmed that the administration will take up to 60 days to assess the economic impact of this move on the global energy landscape. Market observers remain cautious, waiting for clarity on the details regarding the duration of these exemptions and how they will reflect on supply and demand balances in the near term.
