U.S. temporarily eases sanctions on certain Russian oil, causing oil prices to drop

International oil prices edged lower in early trading on Friday, after the US Treasury issued a 30-day license allowing countries to purchase Russian oil and oil products currently stranded at sea, temporarily easing market concerns over tight supply.

According to a report by China National Radio, on March 12 local time, it was learned that the US Treasury announced: Amid recent surges in oil prices due to rising tensions in the Middle East, the US will temporarily relax some sanctions on Russian oil.

Brent crude futures traded at $100.45 per barrel, while US West Texas Intermediate crude traded at $94.36 per barrel. US Treasury Secretary Yellen stated that this move aims to stabilize the global energy market, which has been severely disrupted by the Iran war.

However, analysts warn that this easing measure can only provide temporary relief and cannot solve the core issues of the current energy crisis. Iran's new Supreme Leader, Mojtaba Khamenei, declared that Iran would continue to fight and maintain its blockade of the Strait of Hormuz, using it as leverage against the US and Israel.

License Release Eases Supply Concerns, but Market Remains Divided

The 30-day license issued by the US Treasury, allowing countries to purchase Russian oil and oil products currently stranded at sea due to sanctions, has injected some supply expectations into the global market.

Yang An, an analyst at Haitong Futures, commented: "The release of the license has eased market concerns, but it will not solve the fundamental problems. The most crucial issue is the restoration of shipping through the Strait of Hormuz."

This statement highlights the core paradox facing the current market: although the temporary relaxation of restrictions on Russian oil may help plug part of the supply gap, as long as the situation in the Strait of Hormuz remains unstable, the fundamental risks to the global energy market will be difficult to eliminate.

Just a day before the Russian oil license was released, the US Department of Energy announced a plan to release 172 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). This plan is being advanced in coordination with the International Energy Agency (IEA), which has agreed to release a record 400 million barrels of oil from member countries’ strategic reserves, including the US contribution.

However, IG analyst Tony Sycamore pointed out in a research report that the brief boost from the IEA's release was quickly offset by the dangerous escalation of the Middle East situation. On Thursday, both Brent crude and WTI surged more than 9%, reaching their highest levels since August 2022.

Strait of Hormuz Situation Continues to Worsen, Regional Risks Mount

The latest developments in the Middle East continue to exert pressure on the market. On Thursday, Iraqi security officials reported that two fuel tankers in Iraqi waters were attacked by Iranian vessels carrying explosives; an Iraqi official told the media that the country's oil ports had completely shut down operations.

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

Meanwhile, parties are taking measures to manage the rising risks. In a media interview, Yellen stated that the US Navy will, when military conditions permit, or in coordination with an international coalition, provide escorts for vessels transiting the Strait of Hormuz. Reports indicate that Saudi Arabia is paying premiums to reroute tankers to the Red Sea and is utilizing its east-west pipelines to deliver oil to the global market.