Oil Prices Surge Amid Trump’s Threats on Russia and Iran

West Texas Intermediate (WTI) prices surged by 2.65% to $71.20 due to Trump’s tariff threats against Russian oil and military action against Iran. Brent crude also rose 1.47% to $74.71. Two main geopolitical issues include ceasefire talks in Ukraine and a nuclear agreement with Iran. Market experts predict increasing oil prices in the coming years.

On Monday, U.S. benchmark crude oil prices, particularly West Texas Intermediate (WTI), increased by 2.65%, reaching $71.20. This upsurge is attributed to market apprehensions regarding potential tariff threats from former President Trump against Russian oil buyers, alongside fears of military action against Iran. Similarly, Brent crude also experienced a rise, climbing 1.47% to $74.71.

Two significant geopolitical developments are at play: a proposed ceasefire deal regarding the Russia-Ukraine conflict and renewed discussions concerning Iran’s nuclear program. Trump indicated late Sunday that he may impose secondary sanctions on Russia’s energy sector should no ceasefire be achieved in Ukraine.

Trump announced, “If Russia and I are unable to come to an agreement to stop the violence in Ukraine, and if I believe Russia is responsible… I will impose secondary tariffs on all Russian oil exports,” signalling a tough stance on energy exports from Russia.

Furthermore, Trump expressed concern over comments made by President Putin, who has suggested that a change in Ukrainian leadership may be required for an effective peace agreement. This statement reflects ongoing tensions surrounding the legitimacy of Ukraine’s government and the prerequisites for a ceasefire.

Moreover, Trump threatened military action against Iran if negotiations regarding its nuclear program do not yield results. He stated, “If they don’t make a deal, there will be bombing,” underscoring the seriousness of U.S. intentions. The admonition also includes extending a 25% indirect tariff on Tehran as negotiations continue under challenging circumstances.

This reluctance from Iran to engage in direct discussions adds to the uncertainty, as Tehran maintains that negotiations depend on U.S. actions. Additionally, oil and gas executives surveyed by the Dallas Fed anticipate that WTI will average $68 per barrel over the next six months, with an upward trend expected over the next two years, reaching $80 in five years.

The recent surge in oil prices is predominantly driven by geopolitical tensions involving Russia and Iran, coupled with tariff threats from former President Trump. These developments are likely to exert continued influence over the oil market, affecting both pricing and diplomatic relations. The energy forecast from industry executives indicates cautious optimism amidst volatility, suggesting a gradual price increase over coming years.

Original Source: oilprice.com