Oil prices edged slightly lower as futures reopened for the week, with US President Donald Trump's decision to waive sanctions and tariffs on Russian energy outweighing a weekend report of a tanker explosion in the Strait of Hormuz. The interplay between the two drivers set the tone at the start of the week.

Russia Sanctions Waiver Weighs on Crude

Trump signed an executive order waiving Graham Act sanctions and tariffs targeting Russian energy exports, a move that drew criticism from both parties in Washington. The waiver raises the prospect of more Russian fuel reaching world markets, and traders treated added supply as the main reason crude traded softer in early Asian dealing. The significance for fuel buyers is sizeable: Russia ranks among the world's largest diesel exporters, which is why any loosening of curbs on its product flows resonates well beyond crude benchmarks.

Trump Ties the Move to Ukraine Peace Talks

In a post on Truth Social, Trump said the decision was intended to avoid pushing Moscow away from talks on ending the war in Ukraine. He said significant progress was being made in those negotiations, including on hostages, and added that signing the measure now would risk that outcome while he could do so later. He also argued that Russia was offering Iran far less help than it could, and that he wanted to keep it that way.

Trump said Ukrainian strikes on Russian diesel refineries were hurting global diesel markets, including in the United States, while Russia continued to ship large volumes of cheap diesel. He also sharply criticized Ukrainian President Volodymyr Zelenskyy, accusing him of not wanting the war to end.

Tanker Blast Highlights Gulf Disruption

The energy is central for oil markets. Diesel supply has been strained by attacks on Russian refining capacity, and any easing of restrictions on Russian product exports would add barrels to a tight market at a time when the US war with Iran is already disrupting Gulf flows.

That disruption was underlined on Sunday, when Iran's Islamic Revolutionary Guard Corps (IRGC) navy said an oil tanker caught fire and exploded after striking a naval mine in the southern part of the Strait of Hormuz, according to Iranian media. Details of the vessel involved and any casualties were not immediately available, and the claim could not be independently verified. The stakes are high because the strait is the world's most important oil chokepoint: roughly a fifth of global petroleum liquids consumption transits the passage linking Persian Gulf exporters to open water, according to the US Energy Information Administration, making any incident there an immediate focus for shipping and insurance markets.

A Diplomatic Thread, and Wider Markets

A possible diplomatic thread also emerged on the escalation front, with Iran's ISNA news agency reporting that Pakistan's army chief, Asim Munir, may visit Tehran this week. Pakistan shares a border with Iran and has historically maintained ties with both Tehran and Washington, giving the reported visit potential relevance as a line of communication.

Elsewhere in financial markets, equity and bond futures were mildly firmer, while the euro lagged amid widespread unrest in France and other major euro area cities.

Outlook: Two-Sided Risks for Oil

The early dip was modest, suggesting traders view the Russia waiver as a supply cushion rather than a game-changer while Hormuz risk remains live. Diesel is the product to watch: any sign that Russian product exports are rising would ease pressure on middle distillate cracks — the refining margins for diesel-type fuels — which have carried much of the tightness stemming from the refinery attacks. Against that, a confirmed mine strike in Hormuz would revive the shipping-risk premium quickly, and war-risk insurance and freight costs could rise further.

A Pakistani diplomatic visit to Tehran offers a faint de-escalation thread, but the market is likely to treat it cautiously until there is substance. For now, Trump has chosen to keep Russian barrels flowing to keep Moscow talking, and that has been enough to outweigh the latest flash point in the Strait of Hormuz. The near-term balance for oil hinges on whether the waiver translates into meaningfully higher fuel exports, and whether Hormuz shipping risk escalates further, with headline-driven, two-way trade likely in the meantime.