Crude oil prices pulled back from recent highs after reports that President Trump is considering easing sanctions on some tankers. The aim is to bring down record tanker rates, though Energy Aspects doubts the move would add much tanker availability.
Crude oil prices retreated from yesterday's highs on news that President Trump was considering lifting sanctions on tankers that carry oil and fuels from Venezuela, Russia and Iran. The goal is to ease a deepening tanker crunch.
At the time of writing, Brent crude was trading at $104.39 per barrel, after it topped $106 earlier in the week. West Texas Intermediate was at $94.02 per barrel, after climbing close to $96 yesterday.
Tanker rates hit records in the Persian Gulf war
The war in the Persian Gulf has tightened tanker availability because of a surge in ship-to-ship transfers off the coast of Oman, outside the Strait of Hormuz. As a result, tanker rates are running at record highs, which also reflects the risk of a drone or missile strike from Iran.
Reuters cited an unnamed U.S. official as saying the federal government was contemplating easing sanctions on some vessels from the so-called shadow fleet to bring those rates down. Under the report, shippers who want to use a sanctioned tanker would have to apply to the U.S. Treasury Department.
Analysts question the impact
Record freight rates are a problem for the United States because they dampen demand for U.S. crude, according to Energy Aspects, as cited by Reuters. However, the firm said easing sanctions on tankers that move Russian or Venezuelan crude and fuels would not make much difference to availability, noting that most of them "have been actively trading over the past three months."
The report follows President Trump's deal with Russia that should allow Russia to export up to 4.8 million tons of the fuel. U.S. legislators and European political leaders criticized the deal, saying it would boost Russia's money for war. Most analysts, however, considered the agreed volume rather insignificant and unlikely to change the supply status quo with diesel anywhere.
Source: Investing.com
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