Oil prices moderated on Monday ahead of Donald Trump’s White House return and speculation that sanctions against Russia could be abruptly loosened.
Benchmark Brent crude was trading at US$80.90 a barrel on Monday and off its five-month high of US$82.56 seen last week.
Gains of over 1% last week had been fueled by new sanctions from outgoing president Joe Biden against 100 tankers and two Russian oil producers
Speculation has built that Trump could soon reverse some sanctions on the Russian oil industry though, following his return as president on Monday.
According to ANZ analysts, such a row back could mean recent upward pressure is short-lived, including if Trump were to relax rules in line with previous pledges to bring a quick end to the Ukraine war.
Trump is expected to sign up to several hundred executive orders in quick succession after his inauguration on Monday, with energy sector deregulation set to be in focus.
Trade Nation analyst David Morrison noted Monday would be the “first big test” after oil’s recent rebound as a result.
“There could be some volatility should Trump announce anything to encourage the domestic oil industry to increase production.”