Oil prices decline even in the face of Trump’s caution regarding potential tariffs on Russian purchasers. Oil prices declined on Monday, positioning themselves for a slight quarterly loss. This movement occurred in the context of a cautionary statement from U.S. President Donald Trump, indicating the potential for secondary tariffs on purchasers of Russian oil should he perceive that Moscow is obstructing his attempts to resolve the conflict in Ukraine.
June Brent crude futures experienced a decline of 21 cents, equivalent to 0.3%, settling at $72.55 per barrel by 0710 GMT. Meanwhile, U.S. West Texas Intermediate crude saw a decrease of 27 cents, or 0.4%, bringing its price to $69.09 per barrel. The front-month Brent contract, having declined by 12 cents or 0.2%, is currently priced at $73.51 and is set to expire later today. Both benchmarks appear poised to conclude the month with a modest decline, marking their inaugural quarterly decrease in two quarters.
On Sunday, Trump expressed his frustration towards Russian President Vladimir Putin, indicating that he would consider implementing secondary tariffs ranging from 25% to 50% on purchasers of Russian oil should he perceive that Moscow is obstructing his attempts to resolve the conflict in Ukraine. On Sunday, Trump issued a warning to Iran, suggesting the possibility of military action and the imposition of secondary tariffs should Tehran fail to reach an agreement with Washington regarding its nuclear program.
UBS analyst Giovanni Staunovo noted that “(Trump’s) threat regarding secondary tariffs on Russian and Iranian oil is a consideration for oil market participants, despite his current indication that he does not plan to implement them.” “However, there is an increasing likelihood of more significant supply risks in the future.” According to IG analyst Tony Sycamore, the decline in oil prices occurred despite Trump’s remarks, as the market appeared skeptical about the likelihood of him implementing his threats. Furthermore, should these threats materialize, they would represent an escalation toward a trade conflict, which could negatively impact global growth and subsequently reduce demand for crude oil.
The OPEC+ coalition, consisting of OPEC members and allied nations spearheaded by Russia, is poised to initiate its strategy of incremental monthly oil production increases starting in April. According to a report from Reuters last week, the group is expected to persist in increasing oil production in May. “We anticipate that WTI will remain within a range of $65 to $75 in the near term as the market evaluates the implications of Trump tariffs on oil supply and the global economy, alongside the supply dynamics from the U.S. and OPEC+,” stated Yuki Takashima, a specialist at Nomura Securities.
Saudi Arabia, the leading oil exporter, is poised to reduce its crude prices for Asian purchasers in May, potentially reaching a three-month low, in response to the significant drops in benchmark prices observed this month, according to traders. In a strategic move, Iran has adjusted the pricing of its light crude oil grade for Asian purchasers, setting it at $3.95 per barrel above the Oman/Dubai average for the month of April. Negotiations aimed at resuming Kurdish oil exports via the Iraq-Turkey pipeline have encountered obstacles due to ongoing ambiguities surrounding payment structures and contractual agreements, according to two sources familiar with the situation who spoke to Reuters.