Oil prices dropped on Monday as U.S. President-elect Donald Trump prepared to ease restrictions on Russia’s energy sector in exchange for a deal to end Ukraine’s war, reducing fears of supply disruptions caused by tougher sanctions.
Brent crude futures fell 16 cents, or 0.2%, to $80.63 a barrel after closing down 0.62% in the previous session.
The most active U.S. West Texas Intermediate crude contract in April fell 6 cents to $77.33 a barrel. The forward month’s contract, which ends on Tuesday, was at $78.03 a barrel, up 15 cents, or 0.19%, after falling 1.02% on Friday.
Trump, scheduled for inauguration later on Monday, plans to make a series of political announcements early in his second term, including ending a temporary moratorium on U.S. policies. LNG export licenses — as part of a broader strategy to boost the economy.
There is a fair amount of uncertainty in the upcoming markets this week given President Trump’s inauguration and the set of executive orders he is reportedly planning to sign,” ING analysts said in a note.
This, in addition to being an American holiday today, means that some market participants may have decided to rule out some risks.
Both contracts rose more than 1% last week in their fourth straight weekly rise after the Biden administration sanctioned more than 100 Russian tankers and oil producers. This has led to a scramble for fast oil shipments by major buyers China and India for fast oil shipments and a rush for ship supplies as Russian and Iranian oil traders sought unlicensed tankers to transport their cargo.
Analysts from ANZ Bank said in a note to clients that while the new sanctions could affect the supply of nearly one million barrels per day of oil from Russia.
Oil prices under pressure from Trump’s policies and Chinese demand
After rising in the first two and a half weeks of the year, oil prices began showing some signs of weakness in the middle of last week as investors’ focus shifted towards Trump’s bearish energy agenda. Concerns about demand in China, a key factor in OPEC’s supply quota restrictions last year, were postponed after GDP and industrial production data last week surprised the market with a rally.
But uncertainty about Chinese demand will persist unless we see a trend of stronger data in the coming weeks and months. Meanwhile, cold weather in the U.S. also helps keep fuel demand high, but a mild weather forecast later in the month provides a balance to this.
Crude oil faces challenges from several sources
Looking beyond temporary factors like the weather and weekly inventory reports, the oil price outlook is far from great this year.
Oil prices this year have faced a tug-of-war between different forces: China’s evolving economic strategies and geopolitical tensions versus Trump’s energy policies, which many view as bearish for oil prices. According to Bloomberg, sources familiar with the matter expect Trump to invoke emergency authorities shortly after his swearing-in as part of his plan to unleash domestic energy production. Trump has also threatened to impose deep tariffs on major trading partners including China, Canada and Mexico, which could hurt demand.
They said Trump had promised to help end the war between Russia and Ukraine quickly, which could involve easing some restrictions to enable a deal. Analyst Tim Evans said the new sanctions were expected to curb supply, at least in the short term.
Expectations of easing restrictions push oil prices lower
We’re lowering prices on Monday as U.S. President Donald Trump plans to ease efforts to cut Russian energy in exchange for a Ukraine war, aiming to offset the disruption caused by stricter measures.
Brent crude futures agreed 16 cents, or 0.2%, at 80.63, so they decided to withstand after closing by 0.62% in the previous session.
The most active U.S. West Texas Intermediate crude on April 6 bought cents to $77.33 and wanted to. The monthly race, which runs on Tuesday, was at 78.03 and is heading up 15 cents, or 0.19%, after hitting 1.02% on Friday.
The work, set to be inaugurated later on Monday, commonly makes a series of commercials during the first two trading hours. This includes halting U.S. liquefied gas exports temporarily as part of a broad strategy to boost the economy.
“There is a fair amount of certainty in the upcoming lack of knowledge this week given the inauguration of the CEO who then plans to sign it,” the ING analyst said in the document.
Klein increased holdings by more than 1% last week, marking the fourth consecutive week of growth, after operating on more than 100 Russian tankers and oil producers. That has prompted key Chinese leaders to defend them for fast shipments of oil and defend oil vessels as Russian and Iranian trade seeks unlicensed reaper to transport their cargo.
They said Trump had promised to help end the war between Russia and Ukraine quickly, which could amount to some restrictions and commit to happening. Tim Evans said the new programs are expected to unite from supply, at least in September. Brent’s monthly spread extended 5 cents to $1.27 on Monday.
