Oil prices jumped 3% to a five-week peak on Monday as escalating geopolitical risks fueled supply fears, with U.S. President Donald Trump threatening 25–50% tariffs on Russian oil buyers and military action against Iran. Brent crude settled at
74.74/barrel.
Key Drivers:
Russia Sanctions Risk: Trump warned of secondary tariffs on nations purchasing Russian oil if Moscow obstructs Ukraine peace efforts, targeting key buyers like China and India. The Kremlin claimed talks for a settlement are ongoing.
Iran Tensions: Trump threatened to bomb Iran unless it halts nuclear ambitions, prompting Tehran’s Supreme Leader to vow retaliation. Iran’s Revolutionary Guards seized two tankers in the Persian Gulf, escalating regional instability.
Supply Disruptions: Kurdish oil exports via Iraq-Turkey remain stalled, while the U.S. moved to revoke Repsol’s license for Venezuelan oil shipments.
Market Dynamics:
Brent-WTI Spread Narrows: The gap tightened to $3.02/barrel, a 9-month low, reducing incentives for U.S. crude exports.
U.S. Production Dip: January output fell 305,000 bpd to 13.15M bpd, the lowest in a year.
Demand Signals: China’s manufacturing activity hit a 12-month high, and easing German inflation bolstered hopes for ECB rate cuts, supporting oil demand.
Analyst Insights:
UBS’s Giovanni Staunovo: “Trump’s threats introduce supply risks, though immediate tariffs are unlikely.”
IG’s Tony Sycamore: Traders doubt Trump’s follow-through, fearing tariffs could spark a trade war and dent global growth.