Oil futures retreat as Washington considers tanker sanctions relief

Oil prices slipped on Friday as traders assessed possible US sanctions relief for oil tankers against continuing threats to Middle East supplies.

Brent crude futures fell 41 cents, or 0.39%, to $105.51 a barrel by 0012 GMT. US West Texas Intermediate futures declined 54 cents, or 0.55%, to $97.43, reversing part of Thursday’s advance.

The decline followed a mixed session in which WTI settled $2.88 higher, or 3.03%, at $97.97 a barrel, supported by a substantial withdrawal from US crude inventories. Brent finished 14 cents lower at $105.92, as shipping concerns and the prospect of sanctions adjustments pulled prices in opposite directions.

Washington is considering measures that could allow certain previously sanctioned tankers to carry oil traded legally, potentially increasing available shipping capacity and easing freight costs. The discussions concern vessels associated with the shadow fleet, a loosely defined network used to transport oil under sanctions restrictions.

The US Department of Energy has said any relief would not be designed to facilitate Russian oil or petroleum product shipments. No final decision on the proposed tanker arrangements had been announced by early Friday, leaving the scale and practical consequences of any change uncertain.

The discussions follow President Donald Trump’s temporary relaxation of restrictions on Russian diesel fuel, undertaken as governments seek to contain elevated energy costs. The distinction between allowing additional ships to operate and permitting sanctioned Russian cargoes remains central to the administration’s approach.

Oil traders are assessing whether expanding the pool of eligible vessels would reduce transport costs without materially increasing the volume of crude available for sale. Lower freight rates could alter the competitiveness of different export grades, even if the underlying supply of oil remains unchanged.

Supply concerns nevertheless persisted as attacks on commercial shipping and intensifying hostilities around the Middle East raised doubts about the reliability of regional exports. The Strait of Hormuz, an important passage for Gulf oil shipments, remained a particular focus for traders assessing disruptions to tanker movements.

The competing pressures have produced uneven movements between the two principal crude benchmarks. WTI benefited on Thursday from domestic inventory figures, while Brent remained more exposed to the balance between international shipping risks and possible policy changes affecting tanker availability.

The US Energy Information Administration reported an 8.6 million-barrel fall in commercial crude inventories, a considerably larger withdrawal than traders had anticipated. The decline provided immediate support for US futures by indicating a tighter near-term balance in the domestic market.

The agency’s figures also showed diesel inventories falling by 2.5 million barrels, while gasoline stocks increased by 3.5 million barrels. The contrasting movements highlighted differences across fuel markets at a time when governments are examining additional measures to relieve supply pressures.

The International Energy Agency agreed on Thursday to release more than 20 million barrels of diesel into the market, alongside any oil remaining from an emergency reserve release pledged in March. The intervention is intended to increase supplies of transport fuel and moderate prices.

Haitong Futures said in a Friday note that the market’s response suggested traders were dissatisfied with the supply measures. The firm argued that an easing of Middle East tensions would be more effective in reducing oil prices than additional emergency releases alone.

The reserve decision comes amid particular concern over diesel availability, which affects road freight, industrial operations and other commercial activity. Releasing refined fuel directly can address immediate shortages more quickly than supplying crude that must first pass through refineries.

However, the effectiveness of additional barrels depends on their location, the speed of distribution and the ability of shipping networks to deliver fuel to markets experiencing tight supplies. Persistent transport disruptions can limit the benefits of emergency stock releases.

Market participants are also monitoring developments involving Ukraine and Russian energy infrastructure, another potential source of disruption to global petroleum flows. Those risks add to uncertainty over freight availability and the movement of refined products.

For refiners and fuel distributors, changes in tanker restrictions could influence procurement costs and delivery schedules. Any adjustment would depend on the precise sanctions exemptions granted, compliance requirements imposed on shipowners and the willingness of insurers to cover affected vessels.

Friday’s initial quotations represented only early Asian trading, following Thursday’s divergent settlement prices. Brent remained above $105 a barrel, while WTI traded below $98, maintaining a substantial premium for the international benchmark over its US counterpart.