Oil prices fell on October 19 from a five-month high as investors took profits after U.S. President Donald Trump lifted sanctions and tariffs on Russia, which could lead to an increase in Russian fuel exports. Reuters reports, UNN writes.
Details
Brent crude futures fell by $1.98, or 1.80%, to $107.88 a barrel by 04:27 GMT (07:24 Kyiv time), after closing on Friday at their highest level since May 19.
The price of U.S. West Texas Intermediate crude stood at $100.25 a barrel, down $1.16, or 1.14%, after closing on Friday at its highest level since September 17.
On Friday, Trump signed an executive order lifting key sanctions and tariffs under the Graham Act, which he signed last month at the demand of lawmakers who wanted to put pressure on Moscow over the war in Ukraine.
However, U.S. Secretary of State Marco Rubio said the president would take up to 60 days to assess the impact of the sanctions and tariffs on the global economy.
What analysts say
"Trump's actions look like another desperate attempt to contain rising oil prices ahead of the U.S. midterm elections," said Priyanka Sachdeva, head of market analysis at Phillip Nova, adding that this does little to resolve the problem of supply disruptions in the Strait of Hormuz, where attacks on oil tankers are continuing.
KCM Trade chief analyst Tim Waterer said that while the lifting of U.S. sanctions on Russia could lead to an increase in Russian fuel exports, conflicting statements are creating uncertainty.
"Until the details and duration become clearer, the market is unlikely to be able to fully price in a sustained increase in supply," he added.
The lifting of the restrictions came after Trump reached a deal with Kremlin head Vladimir Putin on exporting diesel fuel to the United States and other countries.
Impact of the situation in the Middle East
On Friday, the price of Brent crude briefly reached $110 a barrel for the first time since May, as tensions and security threats in the Middle East raised concerns about shipping safety and reduced global energy supplies.
Intensified attacks on commercial vessels sharply cut oil supplies from the Persian Gulf to approximately 8.5 million barrels per day on average over seven days last week, from more than 20 million barrels per day the previous week, according to a note by analytics company Kpler published on Friday. At least 10 confirmed incidents involving commercial vessels were recorded last week, the company added.
Potentially raising the stakes in the war in the Middle East, Egypt said it was ready to provide Saudi Arabia with the necessary support to protect its security and stability from the Houthis in Yemen, allies of Iran.
Price forecast
DBS Bank expects oil prices to remain in the range of $100 to $110 a barrel ahead of the U.S. midterm elections, as Iran and its proxies ensure that oil prices and domestic fuel prices remain a key irritant for American voters.
"The U.S. president is taking various steps to suppress prices ahead of the midterm elections without making any direct concessions to Iran," said the bank's head of energy research, Suvro Sarkar.
"However, all the levers he has deployed—including lifting sanctions on Russia—are short-term solutions and will have virtually no impact on the structural effects on the supply situation."