Oil fell along with other commodities after the U.S. Treasury softened its stance on sanctions that crippled a giant Russian aluminum producer and disrupted the global market for the metal.
Futures in New York dropped 1.5 percent. The U.S. said it will provide sanctions relief to United Co. Rusal if Oleg Deripaska relinquishes control, while also extending the deadline for companies to wind down dealings with the company. While the restrictions on Rusal didn’t directly affect oil, crude traders are closely watching President Donald Trump’s attitude to punitive trade measures as he considers whether to renew sanctions waivers on OPEC member Iran next month.
“It softens the potential geopolitical risk premium that has built up in recent weeks,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “If the U.S. can soften its stance on Russia, I suppose they could do it on Iran as well.”
Crude rallied this month to levels not seen since 2014 as geopolitical tensions ramp up in the energy-rich Middle East, and between the U.S. and Russia. On Friday, Trump on Friday slammed the Organization of Petroleum Exporting Countries, accusing it off artificially boosting prices. While the group and its allies wiped out 97 percent of the targeted surplus that has weighed on prices for three years, their production cuts continue.
West Texas Intermediate crude for June delivery fell 1.5 percent to $67.37 a barrel on New York Mercantile Exchange at 8:34 a.m. local time. The May contract added 0.1 percent to $68.38 on Friday. Total volume traded was about 15 percent above the 100-day average.
Brent crude for June delivery dropped 74 cents to $73.32 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 2 percent last week to settle at $74.06. The global benchmark crude traded at a $5.89 premium to June WTI.
Yuan-denominated futures for September delivery added 0.8 percent to 436.3 yuan a barrel on the Shanghai International Energy Exchange, after climbing 2.3 percent last week. — Bloomberg