Oil slips from a five-month high as Washington eases Russian curbs

Crude retreated from a five-month high, with transits through the Strait of Hormuz the focus of the market¹. The trigger was supply rather than demand: prices slipped after President Trump waived sanctions in a move that may lead to more Russian fuel exports³, and Aaj English reported the fall from a five-month high as the United States eased its Russia curbs⁴.

The Business Times reported that oil fell from the five-month high because supply had stayed intact despite the fighting⁵. The floor under the market has not gone, however. A UBS analyst told Reuters that “ongoing strikes on vessels crossing the Strait of Hormuz and flows remaining below pre-conflict levels continue to provide support”¹.

Tehran’s stated aim

The Washington Post reported that Iranian officials and diplomats in the region say Tehran is seeking to punish President Trump in the midterm elections through oil price pain, with the Strait of Hormuz the instrument². Two Iranian officials told the paper their government is focused on 3 November².

That is an account given by unnamed officials of a government with an obvious interest in appearing able to move the oil price, and it is not an announced policy. It is worth reading alongside the market’s own reading of the risk, which on Monday was that supply was holding and the price could come down^4,5.

Why it matters to investors

Two opposing forces are now priced into the same barrel. On one side, an American sanctions waiver that could add Russian fuel to the market³. On the other, a Gulf chokepoint where vessels are still being struck and flows are still below pre-conflict levels¹, held open by an adversary that says it wants the price high for the next two weeks².

On the flows themselves, the US administration is making the more optimistic claim. Energy Secretary Chris Wright told Fox News that Persian Gulf oil flows had recovered to about 80 per cent of their pre-conflict level⁵, and MUFG Research reported him putting Hormuz flows at the same 80 per cent figure in recent days⁶. That is the American government’s number, not an independently verified one, and the analyst commentary quoted by Reuters still describes flows as below pre-conflict levels¹.

The dates to watch are the US election on 3 November² and any sign that Russian fuel volumes actually reach the market rather than merely being permitted to^3,4.