Oil Drops as US Plans Market Intervention, Russian Waivers

PERTH – Oil prices fell for the first time in six days as the U.S. considers intervening in the futures market. The government also issued waivers allowing Indian refiners to buy Russian crude. These moves aim to ease rising prices caused by the ongoing Middle East conflict. Brent crude dropped $1.14, or 1.33%, to $84.27 per barrel. West Texas Intermediate (WTI) fell $1.46, or 1.8%, to $79.55 per barrel.

The price drop follows a surge caused by the conflict between the U.S., Israel, and Iran, which began on February 28. Tankers are unable to pass through the Strait of Hormuz, which carries about one-fifth of global oil supply. Additionally, refineries, oil output, and liquefied natural gas plants in the region have been disrupted. This combination of factors caused Brent to rise 18% and WTI 21% in the previous four sessions.

A senior White House official said the Treasury Department will announce measures to combat rising energy prices. These may include actions in the oil futures market, though details remain unclear. Such intervention would be unusual, as Washington typically influences oil prices through physical supply adjustments, not financial markets.

The U.S. also issued waivers to address physical supply constraints. Indian refiners are now allowed to purchase sanctioned Russian oil stored on tankers. Sources said these refiners have already bought millions of barrels of prompt Russian crude. This step reverses months of pressure on them to stop such purchases.

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Analysts noted that while prices surged nearly 20% this month, the increase remains moderate compared to previous energy shocks. The Russian invasion of Ukraine in 2022 drove prices above $100 per barrel. Despite recent panic around energy markets, crude remains only slightly above its four-year average.

IG analyst Tony Sycomore emphasized perspective, noting that crude prices are just $3.40 above the average over the past four years. He warned that market reactions may be amplified by geopolitical concerns rather than underlying fundamentals. Analysts continue to monitor both financial markets and physical supply disruptions closely.

Investors will watch how U.S. intervention and Russian crude waivers affect global oil supply and prices. Any additional measures or escalation in the Middle East could quickly shift market trends. Meanwhile, Asian refineries continue adjusting fuel processing due to supply constraints. The situation underscores the interconnectedness of geopolitical events and global energy markets.