Oil Slips Below $109 as Trump Waives Russia Energy Sanctions, but a Tanker Mine Blast in Hormuz Keeps Traders on Edge

Oil prices fell at the start of the trading week as markets weighed two powerful and opposing forces: a decision by US President Donald Trump to ease sanctions on Russian energy, and a reported mine attack on an oil tanker in the Strait of Hormuz, the world's most important energy chokepoint.

Brent crude futures fell about 1.4% to $108.35 a barrel in early Asian trade on Monday, October 19, according to market reports, while US West Texas Intermediate slipped to around $100.70. Brent had risen nearly 5% the previous week on fears of supply disruptions in the Middle East. Even after Monday's decline, oil remains far above the levels of early 2026, keeping pressure on fuel-importing economies such as India.

The moves capped a dramatic weekend for energy markets, in which Washington loosened restrictions on one major supplier while tensions escalated around another critical supply route.

Trump's Russia waiver

On Friday evening, Trump signed an executive order suspending numerous sanctions on Russia just days before they were due to take effect. He also waived proposed tariffs on countries that import Russian oil, saying the move was in the US national interest.

The decision followed a diesel import agreement between the United States and Russia agreed the previous week, under which some Russian fuel will reach markets including Turkey. In a post on his Truth Social platform, Trump said the waiver would help keep Russia engaged in peace talks over the war in Ukraine. He also blamed Ukrainian drone attacks on Russian energy facilities for pushing up global fuel prices.

US Secretary of State Marco Rubio described the waiver as a temporary pause, saying it would give officials time to assess its impact on the global economy and trade. The move drew criticism from lawmakers in both of America's main parties, many of whom have pushed for tougher measures against Moscow. Ukraine said it would continue attacking Russian energy infrastructure and expressed concern about further agreements between Washington and Moscow.

Domestic politics are also a factor. Rising fuel prices have become a major issue for American households ahead of the US midterm elections, and the White House has been looking for ways to bring down petrol and diesel costs.

A mine strike in Hormuz

Pulling prices in the other direction was a reported attack in the Strait of Hormuz. On Sunday, Iranian media, citing the navy of Iran's Islamic Revolutionary Guard Corps, reported that an oil tanker caught fire and exploded after striking a naval mine in the southern part of the strait. The vessel was not named, and details of casualties were not available. The claim could not be independently verified.

The incident adds to a long series of disruptions in the region, where tensions between the United States and Iran have repeatedly threatened shipping. Roughly a fifth of the world's oil supply typically passes through the Strait of Hormuz, along with large volumes of liquefied natural gas from Qatar. Attacks on vessels there have sharply raised war-risk insurance premiums for shipowners this year and forced some operators to reroute or suspend voyages.

Elsewhere in the region, clashes between Saudi Arabia and Iran-backed Houthi forces in Yemen have raised concerns about disruption to Red Sea shipping and Gulf energy infrastructure. Riyadh's main airport only reopened on October 18 after closures linked to Houthi attacks.

Headlines in both directions

Market commentators described the Russian waiver as a supply cushion rather than a game changer. Russian oil has continued to flow to buyers such as India, China and Turkey despite years of Western sanctions, often through a so-called shadow fleet of tankers. Easing sanctions may make those flows cheaper and more reliable, and could add some diesel to tight global markets, but it does not add large new volumes overnight.

A confirmed mine strike in Hormuz, by contrast, could quickly push up the risk premium that traders build into oil prices. Diesel is seen as the product to watch, because global refining capacity is tight and attacks on refineries in Russia and the Middle East have reduced supply. Disruptions in the Strait have also cut flows of bunker fuel used by ships, according to industry reports.

The result is a market that is likely to trade on headlines in both directions, with prices swinging as news emerges from Washington, Moscow, Tehran and the Gulf.

What it means for India

For India, which imports more than 85% of its crude oil, the developments carry high stakes. India's crude import bill rose by nearly $29 billion in the first half of the current financial year to $90.6 billion, driven by higher average prices rather than higher volumes, according to recent estimates. Higher oil prices widen the current account deficit, weaken the rupee and feed into inflation through transport and fuel costs.

The Russian waiver is particularly relevant because India has become one of the largest buyers of Russian crude since 2022. Indian refiners are expected to import around 1.8 to 1.9 million barrels a day of Russian oil in October. The threat of US secondary tariffs on buyers of Russian oil had hung over Indian refiners and trade negotiators, and the waiver removes that risk, at least for now.

The rupee strengthened to 94.80 against the dollar in early trade on Monday, helped in part by the dip in crude prices. However, analysts warn that any escalation in the Gulf could quickly reverse those gains. Foreign portfolio investors have cited high oil prices as one of the reasons for heavy selling of Indian equities this year.

What to watch

In the days ahead, traders will be watching for confirmation of the details of the Hormuz incident, any response from the United States or Gulf states, and how long Washington's Russia waiver remains in place. Talks over Ukraine, the state of US-Iran relations and the Saudi-Houthi conflict will all influence the supply outlook.

Demand is the other half of the equation. China's economy grew a better-than-expected 4.5% in the third quarter, supporting expectations for steady oil consumption, while high prices have already begun to curb demand in some importing countries.

For now, the oil market is caught between a political decision that promises more supply and a security situation that threatens to disrupt it. Until one of those forces clearly dominates, volatility is likely to remain the defining feature of energy markets, with direct consequences for inflation, interest rates and growth around the world.