Oil prices drop amid easing of sanctions
Oil prices dropped from their previous highs as reports emerged that President Trump is mulling over easing sanctions on tankers carrying oil and fuels from Venezuela, Russia, and Iran. As of this writing, Brent crude stood at $104.39 per barrel, while West Texas Intermediate was at $94.02 per barrel.
The war in the Persian Gulf has tightened the availability of tankers due to the surge in ship-to-ship transfers off the coast of Oman. Tanker rates are running at record highs, factoring in the risk of a drone or missile strike from Iran.
An unnamed U.S. official said the U.S. federal government is contemplating easing sanctions on some vessels from the so-called shadow fleet to bring down record tanker rates. Shippers would have to apply to the U.S. Treasury Department to use a sanctioned tanker.
Read Also: Diesel prices exceed gasoline costs in US
The record freight rates are problematic for the United States, as they dampen demand for U.S. crude, according to Energy Aspects. The easing of sanctions on tankers used for transporting Russian or Venezuelan crude and fuels would not make much difference to tanker availability, as most tankers sanctioned over Russian or Venezuelan links have been actively trading over the past three months.
President Trump’s deal with Russia, which should see the latter export up to 4.8 million tons of fuel, was criticized by U.S. legislators and European political leaders. They claimed it would boost Russia’s money for war, although the volume agreed under the deal is considered insignificant and unlikely to change the supply status quo with diesel.
It is worth noting that the U.S. Treasury Department will be responsible for reviewing applications from shippers who want to use sanctioned tankers.
