Oil Prices Drop as Trump Considers Easing Shadow-Fleet Sanctions

Oil prices fell more than 1% on Thursday, with Brent crude dropping to $104.42 and West Texas Intermediate falling to $94.11. The decline follows a period of volatility caused by increased strikes in the Strait of Hormuz, where Iran has targeted shipping vessels, including a container ship and a dry bulk carrier, in response to U.S. port blockades and sanctions.

To combat record-high freight costs resulting from the conflict, the Trump administration is considering easing sanctions on shadow-fleet vessels to allow legal oil to flow and lower consumer prices. This potential policy shift comes as the International Energy Agency reports increased crude oil production from Russia and higher exports from Middle East Gulf producers, both of which have helped stabilize the market.

These stabilizing factors offset data from the American Petroleum Institute showing significant draws in U.S. crude oil and distillate inventories. The regional instability has also seen the Houthis target the headquarters of Aramco, further complicating the energy landscape in the Middle East.