Crude falls on report Trump may ease Russian sanctions

Crude prices edged lower following a report by The Atlantic that President Trump backs a proposal to grant sanctions relief in exchange for freeing political prisoners. Trump's envoy John Coale is spearheading the effort, which remains preliminary. Trump was said to have voiced support for the idea months earlier.

The report is significant for oil markets since a viable chance of loosening Russia's restrictions might eventually add more Russian crude to global supplies. As a top global oil producer and exporter, Russia could see improved access for its barrels if sanctions pressures ease, especially for key Asian purchasers.

This development arrives as global oil markets already face sizable supply interruptions, a factor that makes the possibility of more Russian crude noteworthy. According to The Atlantic, sanctions and waivers have already substantially changed global oil trade patterns. Russia helped provide alternate supplies during the Middle East supply shock.

For crude oil, the effect is mostly about expectations, not a direct shift in actual barrels. Because the proposal is still in its infancy, major volumes are not coming back to the market anytime soon.

Still, any easing of Russian sanctions could add a further downside risk for crude. Resolution of the US-Iran dispute would cause a sharp, rapid selloff in oil. At present, the Russian sanctions story is a secondary factor that is capping upside rather than altering the broader trend.