Oil Slips From Five-Month High as Russia Waiver Eases Supply Fears
Brent fell nearly 2% to about $108 on Monday after Trump’s Russia sanctions waiver raised hopes of more fuel supply, though Gulf shipping attacks kept prices elevated.
Oil prices retreated on Monday from their highest levels in five months after US President Donald Trump’s waiver of key Russia-related sanctions and tariffs raised the prospect of more Russian fuel reaching world markets. The relief was limited, however, as attacks on shipping in the Gulf continued to choke crude flows from the region.
Brent crude futures fell $1.94, or 1.77%, to $107.92 a barrel by 0227 GMT in Asian trade, according to Reuters. US West Texas Intermediate dropped 83 cents, or 0.82%, to $100.58. Prices moved within a narrow band through the session, with other reports placing Brent between $108 and $108.50 in early trade.
A sharp run-up last week
Monday’s dip followed a steep rally. On Friday, 16 October, Brent briefly touched $110 a barrel for the first time since May before settling up $3.94, or 3.7%, at $109.86, its highest close since 19 May. WTI ended Friday at $101.41, up $3.44, the highest since 17 September. Over the week, Brent gained 4.9% and WTI 10.4%, Reuters reported.
The reversal came after Trump signed an executive order on Friday waiving key sanctions and tariffs under the Graham Act, the law that empowers Washington to penalise buyers of Russian energy. Business ERA covered the waiver and its implications for India and China in an earlier report. Under a separate supply arrangement agreed between Trump and Russian President Vladimir Putin, Russian diesel exports are expected to start at about 2.3 million barrels this month and rise to about 7.6 million barrels a month.
Analysts also pointed to profit-taking after the run-up. Tim Waterer, chief analyst at KCM Trade, said the waiver’s softer tone was “helping to cap the upside in the near term”. He cautioned that traders were still waiting for clarity, adding that “until the details and duration are clearer”, the market was unlikely to fully price in the change.
Gulf disruption keeps a floor under prices
The supply picture in the Middle East remains fragile. Data firm Kpler estimates that crude flows from the Gulf fell to about 8.5 million barrels a day on a seven-day average basis last week, from more than 20 million barrels a day the week before. At least 10 incidents involving commercial vessels were confirmed last week, while Iran said it was stepping up strikes in response to a US blockade of its ports. A Saudi-led coalition also intercepted a missile aimed at the Red Sea port of Yanbu.
Not every assessment is as stark. A Bloomberg report cited by other outlets said more than 100 million barrels moved through the Strait of Hormuz last week under US military escort, with supply described as close to pre-war levels. The divergence between the two estimates underlines how hard it has become to gauge real-time flows from the region, and why prices remain so volatile.
Elsewhere, Ukraine struck Russia’s Ryazan refinery, adding to concerns over refined-product supply even as more Russian diesel is set to be allowed into Western markets.
Emergency barrels on the way
Governments are trying to cushion the shock. The International Energy Agency has agreed to release more than 20 million barrels of fuel. The US Department of Energy has issued a request for an exchange of up to 17 million barrels from the Strategic Petroleum Reserve, on top of an earlier 172-million-barrel loan from the reserve. Both moves form part of the IEA’s wider plan to release 400 million barrels.
American consumers are feeling the strain. The national average price of gasoline stood at $4.29 a gallon on Sunday, according to motoring group AAA. On NBC’s Meet the Press the same day, Treasury Secretary Scott Bessent described the inflation spike as “an energy supply side shock”, adding that price relief would depend on how the Iran conflict unfolds.
Why it matters for investors
For markets, crude above $100 is feeding directly into inflation expectations and bond yields, complicating the Federal Reserve’s task ahead of its 27–28 October policy meeting. Higher fuel costs are also squeezing airlines, chemical makers and transport companies, while lifting the earnings outlook for oil producers and refiners.
Goldman Sachs analysts see Brent rising to $120 if attacks on shipping escalate, or easing towards $80 if Gulf exports normalise, as reported by the Economic Times. The bank expects natural gas and refined products to rise more than crude. Brent is up roughly 80% so far this year, according to Bloomberg.
The India angle
India, which imports most of the crude it consumes, is among the economies most exposed to the price swing. Even a modest pullback in Brent eases pressure on the import bill, the rupee and inflation. Retail fuel prices were unchanged on Monday, with petrol at ₹102.12 a litre and diesel at ₹95.20 in Delhi, and petrol at ₹111.21 and diesel at ₹97.83 in Mumbai.
The waiver also matters for Indian refiners that buy Russian crude. A softer US stance on secondary penalties reduces the near-term risk of tariffs on Indian exports, though the waiver remains subject to a 60-day assessment. Bessent said on Sunday that the US had asked European allies in the spring to join secondary tariffs on India and China, and that they had declined.
What to watch
Traders will look to US weekly crude inventory data due on Wednesday, 21 October, for signs of how domestic stocks are holding up. The 60-day assessment period under the Graham Act will determine whether the waiver becomes durable. Shipping incidents in the Gulf and the Strait of Hormuz remain the biggest swing factor, and oilfield services major SLB’s results on Friday, 23 October, will offer an early read on how the industry views the outlook.
