Investors Eye Trump Move on Russian Export Curbs

Oil prices fell on Monday as expectations of U.S. President-elect Donald Trump relaxing curbs on Russia’s energy sector in exchange for a deal to end the Ukraine war offset concern of supply disruption from harsher sanctions.

Brent crude futures dropped 16 cents, or 0.2%, to $80.63 a barrel by 0453 GMT after closing down 0.62% in the previous session.

The more active U.S. West Texas Intermediate crude April contract fell 6 cents to $77.33 a barrel. The front-month contract, which expires on Tuesday, was at $78.03 a barrel, up 15 cents, or 0.19%, after settling down 1.02% on Friday.

Trump, who will be inaugurated later on Monday, is widely expected to make a flurry of policy announcements in the first hours of his second term, including an end to a moratorium on U.S. liquefied natural gas export licences – part of a wider strategy to strengthen the economy.

Both contracts gained more than 1% last week in their fourth successive weekly ascent after the Biden administration sanctioned more than 100 tankers and two Russian oil producers. That led to a scramble by top buyers China and India for prompt oil cargo and a rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers to ferry their load.

While the new sanctions could impact the supply of nearly 1 million barrels per day of oil from Russia, recent price gains could be short lived depending on Trump action, ANZ analysts said in a client note.

Trump has promised to help end the Russia-Ukraine war quickly, which could involve relaxing some curbs to enable an accord, they said.

Analyst Tim Evans said the new sanctions are seen curtailing supply, at least in the near term.

Easing tension in the Middle East also kept a lid on oil prices.

Hamas and Israel exchanged hostages and prisoners on Sunday that marked the first day of a ceasefire after 15 months of war.

Separately, investors are watching out for the impact from a cold snap in Texas and New Mexico which may affect U.S. oil production, analysts at ANZ and ING said.