Oil rebounds after early slide on Trump’s Russia waiver

Oil prices pulled back from five-month highs on Monday, October 19, after President Donald Trump signed an executive order late Friday waiving new sanctions and tariffs on Russia. Traders took the move as a sign that more Russian fuel could reach world markets. By midday in New York, though, the drop had faded. Attacks on shipping around the Strait of Hormuz and fresh Houthi strikes in Saudi Arabia pushed crude back up.

Brent crude fell more than 2% in Asian trading, according to Reuters Thomson Reuters Corporation ↘ 0.07%. On Friday it had settled at $109.86 a barrel, its highest close since May 19. U.S. West Texas Intermediate briefly fell below $100. The Associated Press reported losses of about 2% for both benchmarks early in the day. Brent had erased its losses and was edging higher by 1 p.m. ET, after falling more than $3 earlier in the session, Reuters reported.reuters.com+3

What the Waiver Does

The order waives key sanctions and tariffs under the Graham Act, which Trump signed last month to pressure Moscow over its war in Ukraine. Secretary of State Marco Rubio said the president will take up to 60 days to assess the economic impact. The waiver follows a diesel deal with Russian President Vladimir Putin. Exports under that deal are set to start at about 2.3 million barrels this month and rise to roughly 7.6 million barrels a month. The order came days before the measures were due to take effect. It disappointed Ukraine and comes ahead of the Nov. 3 midterm elections, with U.S. fuel prices still high.kansas.com+2

"Trump's move looks like another desperate attempt to keep oil prices in check ahead of the US midterm elections," said Priyanka Sachdeva of Phillip Nova. KCM Trade's Tim Waterer said mixed messaging means the market is unlikely to fully price in extra supply "until the details and duration are clearer".live.euronext.com+1

Middle East Risks Limit Losses

Gulf crude flows fell to a seven-day average of about 8.5 million barrels per day last week, down from more than 20 million the week before, according to analytics firm Kpler. Kpler counted at least 10 confirmed incidents involving commercial vessels. On Sunday, a tanker exploded after hitting a naval mine in the Strait of Hormuz, Iranian media reported. On Monday, Yemen's Houthis said they had attacked Saudi energy targets, including a Saudi Aramco facility in Yanbu. Reuters could not verify the claims.au.investing.com

"Ongoing strikes on vessels crossing the Strait of Hormuz and flows remaining below pre-conflict levels continue to provide support," said UBS ↘ 1.07% analyst Giovanni Staunovo. SEB Skandinaviska Enskilda Banken AB analyst Bjarne Schieldrop warned that Iran could escalate attacks before the midterms. Exness strategist Christopher Tahir said little progress has been made in talks on reopening the waterway, which leaves "prices supported" (MarketWatch News Corp ↘ 0.53%).marketwatch.com+1