2025-04-01T05:35:42Z
- Oil prices rose after Trump threatened secondary tariffs on Russian and Iranian oil buyers.
- The tariffs could deter countries like China and India from buying Russian and Iranian oil.
- Analysts still largely expect continued pressure on oil prices due to macroeconomic concerns.
US President Donald Trump just surprised the lackluster oil market by threatening so-called secondary tariffs on Russia and Iran.
This means any country buying Russian and Iranian oil would be subject to US tariffs if they also trade with America.
“If it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries,” wrote commodities strategists from ING in a Tuesday note. Russia is the world’s second-largest oil exporter while Iran is a member of the Organization of the Petroleum Exporting Countries.
China and India are the top buyers of Russian crude oil. Trump’s “secondary tariffs” could be “very effective in persuading buyers to shun the targeted oil, with the impact on the buying country’s economy potentially far outweighing the benefits of buying discounted crude oil,” wrote the ING strategists. China is also a top buyer of Iranian oil.
On Monday, US benchmark West Texas Intermediate settled 3.1% higher at $71.48 a barrel while Brent crude oil futures gained 1.5% to end at $74.74 a barrel. Both grades extended gains on Tuesday and were up by 0.3% at 1:03 a.m. ET.
The price gains came after Trump told NBC News on Saturday that he was “very angry” and “pissed off” with Russian President Vladimir Putin’s criticism of Ukrainian President Volodymyr Zelenskyy’s leadership.
The US president also said he would hit Iran with similar levies — and bombings — if Tehran doesn’t reach a deal with Washington over its nuclear program.
There’s a problem with Trump’s approach: inflation.
Since energy prices are a key input cost for nearly all industries, “secondary tariffs” would make it harder for Trump to lower oil prices — one of his campaign promises.
“Instead, it would push prices much higher,” the ING strategists wrote.
However, OPEC+ has committed to increasing production from April and market jitters remain over a global slowdown due to Trump’s tariffs. Those dynamics mean most analysts are still looking for lower-for-longer oil prices.
A Reuters poll of 49 economists and analysts conducted in March showed that they expect oil prices to continue to come under pressure this year.
Oil prices hit a recent peak of around $120 a barrel in June 2022 and now trades above $70 a barrel. Both WTI and Brent oil futures are around 15% lower over the past 12 months.