U.S. temporarily eases sanctions on certain Russian oil, oil prices decline

Global oil prices edged slightly lower on Friday morning, after the U.S. Department of the Treasury issued a 30-day license allowing countries to purchase Russian oil and oil products currently stranded at sea, easing market concerns over supply tightness to some extent.

According to CCTV News, on March 12 local time, the U.S. Department of the Treasury announced that amid recent tensions in the Middle East causing oil prices to rise, the U.S. will temporarily relax sanctions on some Russian oil.

Brent crude futures were at $100.45 per barrel, and U.S. West Texas Intermediate (WTI) was at $94.36 per barrel. U.S. Treasury Secretary Janet Yellen stated that this move aims to stabilize the global energy markets, which have been highly volatile due to the Iran conflict.

However, analysts warn that this easing measure can only provide temporary relief and cannot address the core issues of the current energy crisis. Iran’s new Supreme Leader, Ayatollah Moojtaaba Khamenei, said Iran will continue fighting and maintain its blockade of the Strait of Hormuz as leverage against the U.S. and Israel.

The license issuance has alleviated supply concerns, but market divisions are evident

The 30-day license issued by the U.S. Department of the Treasury allows countries to purchase Russian oil and oil products currently stranded at sea due to sanctions, injecting some supply expectations into the global market.

Haitong Futures analyst Yang An said: “The license issuance has eased market worries but won’t solve the fundamental problem. The most important thing is the resumption of shipping through the Strait of Hormuz.”

This statement reveals the core contradiction in the current market: while the brief unblocking of Russian oil helps fill some supply gaps, as long as the situation in the Strait of Hormuz remains unstable, the fundamental risks to the global energy market cannot be eliminated.

Just one day before the Russian oil license was issued, the U.S. Department of Energy announced it would release 172 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). This plan was coordinated with the International Energy Agency (IEA), which agreed to release a record 400 million barrels from member countries’ strategic reserves, including contributions from the U.S.

However, IG analyst Tony Sycamore pointed out in a report that the short-term boost from the IEA reserve release was quickly overshadowed by escalating tensions in the Middle East. On Thursday, Brent crude and WTI both surged over 9%, reaching their highest levels since August 2022.

The situation in the Strait of Hormuz continues to worsen, increasing regional risks

Latest developments in the Middle East continue to put pressure on the market. On Thursday, Iraqi security officials reported that two fuel oil tankers were attacked by Iranian ships loaded with explosives in Iraqi waters; an Iraqi official told media that the country’s oil ports have been completely shut down.

Oman has evacuated all ships from its main oil export terminal, Mina Al Fahal, located outside the Strait of Hormuz, as a precaution.

Meanwhile, parties are taking measures to address rising risks. Yassine Bensar, in an interview, said the U.S. Navy will provide escort for ships transiting the Strait of Hormuz when military conditions permit, possibly in cooperation with international coalitions. Reports indicate that Saudi Arabia is paying premiums to reroute oil tankers through the Red Sea and is using its east-west oil pipelines to supply global markets.

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