Trump's Russian oil tariff threat doesn't faze traders, say analysts

US President Donald Trump’s threat to hit buyers of Russian oil with tariffs had a limited impact on oil markets on Monday, as traders tried to determine how far the White House could go after Chinese and Indian oil importers.

Trump’s proposal to hit buyers with a 25% to 50% tariff would be significant for oil markets if it turned into an order, but analysts and traders questioned whether the threat was just Trump showing one of many cards in his talks with Russia.

“He changes his mind, so the market is struggling to keep up,” said Adi Imsirovic, an energy consultant and former oil trader. “The market does not believe it any more until it is firm and a few weeks old.” Oil made modest gains on Monday, with global benchmark Brent crude rising by 1.4% to above $74 a barrel. In early March, it fell to almost $68, the lowest since December 2021.

“As Trump yoyos in his decision-making, so do oil prices,” said David Goldman of brokerage Novion. “In the bigger picture, the correction from the selloff appears to have stalled, and the price is moving sideways.” China and India are the major buyers of Russian crude, and their reaction would be crucial to making any secondary sanctions package seriously hurt the world’s second-largest oil exporter.

In the aftermath of Russia’s invasion of Ukraine in 2022, India surpassed China to become the biggest buyer of seaborne Russian crude.

Russian oil comprised about 35% of India’s total crude imports in 2024, raising the stakes for what has become a crucial outlet for Moscow if Trump exerts pressure on New Delhi.

In February, India’s oil secretary said the country’s refiners would buy Russian oil supplied by companies and ships not sanctioned by the US, effectively reducing the number of cargoes and vessels available.

Meanwhile Chinese state oil companies have shied away from Russian oil, with Sinopec and Zhenhua Oil halting purchases, while two others scaled back volumes in the face of renewed US sanctions, Reuters has reported.

China’s top importers of Russian oil are independent refiners with limited ties to the US financial system, which makes them more resilient to pressure and sanctions from Washington.

“There’s an element of fatigue with the announcements from the US administration on tariffs and sanctions,” said ING’s head of commodities strategy Warren Patterson.

“So I suspect until we get something more concrete, the market is not going to overreact to this,” he said.

In India, a refinery official said the threat added uncertainty to the purchasing plans for Indian refiners and was creating difficulties for crude buyers.

Refiners have already tied up purchases for April and May, added the official, who was not authorised to speak publicly on the matter and asked not to be named.

China’s Ministry of Foreign Affairs said its cooperation with Russia is neither directed nor affected by third parties, in response to a question about the tariffs at a daily news briefing.

India’s oil ministry did not immediately respond to a request for comment.

If the tariffs became a serious threat, markets would look to how strictly the policy would be enforced and whether the organisation of the Petroleum Exporting Countries would ramp up production to make up for any drop in Russian exports, analysts said.

The secondary sanctions imposed on Venezuelan oil last week could serve as a model for markets to assess the impact of a similar set of policies against Russia, said Patterson.

Chinese buyers had already paused purchases ahead of those sanctions taking effect on Wednesday. Traders and analysts expect some sales to resume as buyers find workarounds unless Beijing issues a blanket ban.

Meanwhile, oil prices climbed about 2% to a five-week high on Monday on worries supplies could decline if US President Donald Trump follows through on threats to impose more tariffs on Russia and to possibly attack Iran.

Brent futures were up $1.12, or 1.5%, at $74.75 a barrel at 12:16pm, while US West Texas Intermediate crude rose $2.12, or 3.1%, to $71.48.

That put Brent on track for its highest close since February 24 and WTI on track for its highest close since February 21.

Brent’s premium over WTI fell to $3.26 a barrel, its lowest since July 2024.

Analysts have said when Brent’s premium over WTI falls below $4 a barrel, it does not make much economic sense for energy firms to send ships across the ocean to pick up US crude, which should result in lower US exports.

Trump said on Sunday he was “pissed off” at Russian President Vladimir Putin and will impose 25%-50% secondary tariffs on buyers of Russian oil if he feels Moscow is hindering Trump’s efforts to end the war in Ukraine.

“(Trump’s) threat on secondary tariffs on Russia and Iranian oil is a factor oil market participants are tracking, although he has indicated he is not planning to introduce them for now,” said UBS analyst Giovanni Staunovo. “But, there is a rising risk of larger supply risks down the road.”

Some analysts believe that Trump may not act on his threats, a view that is putting a cap on oil prices.

IG analyst Tony Sycamore said the market felt Trump would not follow through. If enacted, he said, the tariffs would be another step toward a trade war that would weigh on global growth and demand for crude oil.

“We expect WTI to stay in a range of $65 to $75 for now as the market assesses the impact of Trump tariffs on oil supply and the global economy, as well as the supply situation from the US and OPEC+,” said Yuki Takashima, an economist at Nomura Securities.

Elsewhere, talks to restart Kurdish oil exports through the Iraq-Turkey pipeline have hit a snag as a lack of clarity over payments and contracts persists, two sources with direct knowledge of the matter told Reuters.

In another move that could limit world oil supplies, US authorities notified Spanish oil company Repsol that its license to export oil from Venezuela is to be revoked.

Trump’s proposal to hit buyers with a 25% to 50% tariff would be significant for oil markets if it turned into an order

SINGAPORE: US President Donald Trump’s threat to hit buyers of Russian oil with tariffs had a limited impact on oil markets on Monday, as traders tried to determine how far the White House could go after Chinese and Indian oil importers.

Trump’s proposal to hit buyers with a 25% to 50% tariff would be significant for oil markets if it turned into an order, but analysts and traders questioned whether the threat was just Trump showing one of many cards in his talks with Russia.

“He changes his mind, so the market is struggling to keep up,” said Adi Imsirovic, an energy consultant and former oil trader. “The market does not believe it any more until it is firm and a few weeks old.” Oil made modest gains on Monday, with global benchmark Brent crude rising by 1.4% to above $74 a barrel. In early March, it fell to almost $68, the lowest since December 2021.

“As Trump yoyos in his decision-making, so do oil prices,” said David Goldman of brokerage Novion. “In the bigger picture, the correction from the selloff appears to have stalled, and the price is moving sideways.” China and India are the major buyers of Russian crude, and their reaction would be crucial to making any secondary sanctions package seriously hurt the world’s second-largest oil exporter.

In the aftermath of Russia’s invasion of Ukraine in 2022, India surpassed China to become the biggest buyer of seaborne Russian crude.

Russian oil comprised about 35% of India’s total crude imports in 2024, raising the stakes for what has become a crucial outlet for Moscow if Trump exerts pressure on New Delhi.

In February, India’s oil secretary said the country’s refiners would buy Russian oil supplied by companies and ships not sanctioned by the US, effectively reducing the number of cargoes and vessels available.

Meanwhile Chinese state oil companies have shied away from Russian oil, with Sinopec and Zhenhua Oil halting purchases, while two others scaled back volumes in the face of renewed US sanctions, Reuters has reported.

China’s top importers of Russian oil are independent refiners with limited ties to the US financial system, which makes them more resilient to pressure and sanctions from Washington.

“There’s an element of fatigue with the announcements from the US administration on tariffs and sanctions,” said ING’s head of commodities strategy Warren Patterson.

“So I suspect until we get something more concrete, the market is not going to overreact to this,” he said.

In India, a refinery official said the threat added uncertainty to the purchasing plans for Indian refiners and was creating difficulties for crude buyers.

Refiners have already tied up purchases for April and May, added the official, who was not authorised to speak publicly on the matter and asked not to be named.

China’s Ministry of Foreign Affairs said its cooperation with Russia is neither directed nor affected by third parties, in response to a question about the tariffs at a daily news briefing.

India’s oil ministry did not immediately respond to a request for comment.

If the tariffs became a serious threat, markets would look to how strictly the policy would be enforced and whether the organisation of the Petroleum Exporting Countries would ramp up production to make up for any drop in Russian exports, analysts said.

The secondary sanctions imposed on Venezuelan oil last week could serve as a model for markets to assess the impact of a similar set of policies against Russia, said Patterson.

Chinese buyers had already paused purchases ahead of those sanctions taking effect on Wednesday. Traders and analysts expect some sales to resume as buyers find workarounds unless Beijing issues a blanket ban.

Meanwhile, oil prices climbed about 2% to a five-week high on Monday on worries supplies could decline if US President Donald Trump follows through on threats to impose more tariffs on Russia and to possibly attack Iran.

Brent futures were up $1.12, or 1.5%, at $74.75 a barrel at 12:16pm, while US West Texas Intermediate crude rose $2.12, or 3.1%, to $71.48.

That put Brent on track for its highest close since February 24 and WTI on track for its highest close since February 21.

Brent’s premium over WTI fell to $3.26 a barrel, its lowest since July 2024.

Analysts have said when Brent’s premium over WTI falls below $4 a barrel, it does not make much economic sense for energy firms to send ships across the ocean to pick up US crude, which should result in lower US exports.

Trump said on Sunday he was “pissed off” at Russian President Vladimir Putin and will impose 25%-50% secondary tariffs on buyers of Russian oil if he feels Moscow is hindering Trump’s efforts to end the war in Ukraine.

“(Trump’s) threat on secondary tariffs on Russia and Iranian oil is a factor oil market participants are tracking, although he has indicated he is not planning to introduce them for now,” said UBS analyst Giovanni Staunovo. “But, there is a rising risk of larger supply risks down the road.”

Some analysts believe that Trump may not act on his threats, a view that is putting a cap on oil prices.

IG analyst Tony Sycamore said the market felt Trump would not follow through. If enacted, he said, the tariffs would be another step toward a trade war that would weigh on global growth and demand for crude oil.

“We expect WTI to stay in a range of $65 to $75 for now as the market assesses the impact of Trump tariffs on oil supply and the global economy, as well as the supply situation from the US and OPEC+,” said Yuki Takashima, an economist at Nomura Securities.

Elsewhere, talks to restart Kurdish oil exports through the Iraq-Turkey pipeline have hit a snag as a lack of clarity over payments and contracts persists, two sources with direct knowledge of the matter told Reuters.

In another move that could limit world oil supplies, US authorities notified Spanish oil company Repsol that its license to export oil from Venezuela is to be revoked.