Global oil prices fell by around 2 per cent on Thursday as reports that the United States may relax sanctions on some Russian oil tankers raised expectations of increased supply and lower shipping costs.
Brent crude futures declined by $2.28, or 2.2 per cent, to $103.78 a barrel by 0729 GMT, while US West Texas Intermediate crude fell $1.34, or 1.4 per cent, to $93.75, reversing gains recorded in the previous session.
The proposed easing of restrictions on Russia’s so-called shadow fleet, which transports oil using vessels operating outside conventional Western shipping and insurance arrangements, could improve the movement of petroleum products and ease pressure on freight rates.
A US official said on Wednesday that the administration was considering relaxing sanctions on some of the vessels. The discussions follow President Donald Trump’s temporary suspension of sanctions on Russian diesel exports as Washington seeks to contain rising global fuel prices.
The latest proposal could allow Russian oil to be transported on previously sanctioned vessels under revised conditions, potentially improving supply flexibility and reducing shipping costs, PVM Oil analyst John Evans said.
However, persistent security threats in the Middle East and renewed Ukrainian attacks on Russian energy facilities continued to limit the decline in crude prices.
Middle East Shipping Attacks Sustain Market Concerns
Oil markets remain exposed to escalating hostilities involving Saudi Arabia and Yemen’s Houthi movement, alongside a surge in attacks on commercial shipping near the Strait of Hormuz.
Maritime officials reported that several vessels in the area had been struck by projectiles in separate incidents over a 24-hour period ending Wednesday.
Attacks around the strategic waterway have increased over the past 10 days, with Iran saying it was intensifying operations in response to the US blockade of its ports and tighter sanctions imposed last month.
The Strait of Hormuz is a critical route for international oil shipments, meaning prolonged disruption could threaten supplies and push prices higher.
MUFG analysts said tensions between Saudi Arabia and the Houthis were continuing to support oil prices through a geopolitical risk premium, although energy infrastructure had not been attacked in the preceding several days.
Ukraine Restarts Strikes on Russian Refineries
The prospect of additional Russian oil shipments was also complicated by Ukraine’s renewed campaign against Russia’s energy infrastructure.
Ukraine resumed attacks on Russian refineries with a strike on a facility in the Ryazan region, according to reports on Thursday. The move followed Ukrainian President Volodymyr Zelenskiy’s criticism of what he described as a dangerous withdrawal of US intelligence support.
Further damage to Russian refining facilities could affect the availability of petroleum products and complicate efforts to stabilize fuel markets.
The combination of possible sanctions relief and attacks on energy infrastructure has left traders weighing the prospect of increased exports against the risk of fresh supply disruptions.
U.S. Crude Stocks Record Sharp Decline
Fresh US inventory data offered another potential source of support for oil prices, despite Thursday’s decline.
Commercial crude inventories fell by 11.1 million barrels in the week ended October 9, according to figures from the American Petroleum Institute cited by market sources on Wednesday. The reduction was substantially larger than analysts surveyed by Reuters had anticipated.
Distillate inventories, which include diesel and heating oil, also declined during the week, while gasoline stocks increased.
The US Energy Information Administration was scheduled to release its official inventory figures at 1600 GMT on Thursday. The report was delayed by one day following the Columbus Day holiday on Monday.
Traders are monitoring the data for signs of changes in US demand and fuel availability as the market balances potential additional Russian supply against persistent geopolitical risks and disruptions to oil infrastructure.
