U.S. sanctions relief to Russia drags oil prices lower

April 23 (UPI) -- Relief measures from U.S. sanctions on Russia rippled across the commodities sector Monday, sending crude oil prices down more than 1 percent in early trading.

The U.S. Treasury Department said Monday it would offer some sanctions relief to Russian aluminum producer United Co. RUSAL, the second-largest company of its kind outside of China. The Treasury Department said it wasn't imposing secondary sanctions and would allow transactions to continue until Oct. 23.

RUSAL is targeted because of its "entanglement" with Russian oligarch Oleg Deripaska, but the Treasury Department said it was careful not to target the company's workers.

"RUSAL has approached us to petition for delisting," Treasury Secretary Steven Mnuchin said in a statement. "Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL's petition."

Deripaska is associated with Paul Manafort, U.S. President Trump's former campaign advisor.

The sanctions relief put the aluminum market in a nose-dive as the risk premium faded, causing ripple effects throughout broader commodities. The price for Brent crude oil was down 0.95 percent as of 9:17 a.m. EDT to $73.34 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.4 percent to $67.47 per barrel.

Ole Hansen, the head of commodity strategy at Danish investment firm Saxo Bank, said in comments sent to UPI that actions from the U.S. Treasury Department could hint at future safety valves.

"Can the U.S. soften its stance on Russia?" he said. "I suppose they could do it on Iran as well."

U.S. President Donald Trump in May decides whether to extend a sanctions waiver for Iran. If he doesn't, which is widely expected, it would break the terms of the U.N.-backed nuclear agreement that lets Iranian oil flow through the market and lead to higher oil prices. Those higher oil prices are causing retail gasoline prices to rise, taking some of the benefits of his tax overhaul away.

Last week, Trump said oil prices were too high already.

From Iran, the country's oil minister, Bijan Zangeneh, said higher oil prices could discourage some members of the Organization of Petroleum Exporting Countries from contributing to the very production cut agreement that Trump said was boosting the market. If the market continues as it has for most of April, extending the agreement would "seem unnecessary," the ministry's official news website, SHANA reported.

On rumors that Iran had offered a discount to some of its oil customers, Zangeneh said there was no special treatment.

"Albeit, we need to resort certain price policies to be able to stay in the market," he said.