Washington to Ease Sanctions on Russia; Crude Prices Slump following Trump’s Comment on Iran War

US President Donald Trump is mulling easing oil sanctions on Russia and releasing emergency crude stockpiles as part of policy actions aimed at curbing the volatility and surge in global crude oil prices, Reuters said. On Monday, the benchmark West Texas Intermediate and Brent crude spiked nearly 30% amid rising concerns over supply chain disruption and output tightening.

According to the report, the likely easing of Russian sanctions reflects White House worries over the increase in oil prices following its coordinated strike with Israel against Iran. Prolonged higher crude prices will hurt businesses and consumers across the world. This could also dampen Trump’s midterm elections scheduled in November.

Trump on Monday said that his team was lifting sanctions on some countries as part of efforts to stabilize the oil market. “So we have sanctions on some countries. We're going to take those sanctions off until the Strait is up,” he said. Easing sanctions on Russia would potentially help keep oil flowing amid disruptions to shipments from West Asia.

However, this could contradict the West’s allegations that Moscow’s oil revenue fuels the war in Ukraine. Mounting pressure from the US and other Western allies compelled New Delhi to reduce its dependence on Russian oil. In the interim trade agreement announced in February, Washington claimed that New Delhi has agreed to stop the purchase of Russian energy. However, India neither confirmed nor declined the claim.

Over the past few months, India has been reducing Russian oil imports and diversifying its suppliers, mostly pivoting to West Asia. Following the escalation of the war in the region, India was particularly exposed. Moreover, last week, the US approved a 30-day waiver for India to purchase Russian oil. Owing to increasing demand, Russian oil is now being sold at a premium, unlike the discounted rates before the oil market volatility.

Oil Volatility

Following the sudden jump in crude prices on Monday, benchmark Brent crude reversed some gains and fell 11% in early trade after Trump stated that the war in West Asia could end soon. Crude oil prices hit multi-year highs on Monday, rising as high as $120 per barrel. WTI crude fell over 10% to $85.17 per barrel.

The fall in crude prices was also supported after a call between Trump and Russian President Vladimir Putin. The discussion between the two leaders included proposals aimed at quickly resolving the Iran war, according to a Kremlin official.

G7 nations also held a call on Monday and said they were prepared to implement “necessary measures” in response to surging global oil prices but did not commit to releasing emergency reserves. G7 nations hold over 1.2 billion barrels of stockpiles for emergencies.