Oil Prices Increase as U.S Threats Raise Supply Risks

Oil Prices Increase as U.S Threats Raise Supply Risks

Oil prices increased in the global commodities market after US President Donald Trump threatened Russian oil buyers with additional tariffs over ceasefire efforts in Ukraine and warned of unprecedented bombing of Iran if it refused to agree to a nuclear deal.

Brent crude, increased by around 0.69% trading at $73.22 per barrel, up from $72.76 at the previous session’s close. The US benchmark, West Texas Intermediate (WTI) rose by about 0.66%, settling at $69.80 per barrel, compared to its prior session close of $69.36.

Trump threatened Iran Sunday with unprecedented bombing if it did not agree to engage with Washington in negotiations over its nuclear program, marking the most explicit warning of military action since he assumed office in January.

‘If they don’t make a deal there will be bombing. It will be bombing the likes of which they have never seen before,’ Trump said during an interview with NBC News.

He also said Sunday that he is ‘very angry’ at Russian President Vladimir Putin over comments he made criticizing Ukrainian President Volodymyr Zelenskyy’s credibility.

Putin on Friday called for a ‘transitional administration’ to be installed in Ukraine and that the Russian military would ‘finish off’ Ukrainian forces. Trump said the comments made him ‘very angry’ as he seeks to broker a truce that would halt the bloodshed in Ukraine.

He further threatened to impose sanctions on Russia’s oil sector if he believes the Kremlin is not contributing to efforts to secure a ceasefire in Ukraine.

“If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia’s fault — which it might not be — but if I think it was Russia’s fault, I am going to put secondary tariffs on oil, on all oil coming out of Russia,’ he said.

“That would be that if you buy oil from Russia, you can’t do business in the United States,” he added. “There will be a 25% tariff on all oil, a 25- to 50-point tariff on all oil.”

“US sanctions on Iran’s oil industry appear to be biting with at least 11 US sanctioned tankers containing Iranian oil reportedly sitting idled off the coast of Malaysia,” Daniel Hynes, a senior commodity strategist at the Australia and New Zealand Banking Group, in a note.

“Some of the ships, which are holding close to 17mbbls, have been sitting there for over a month. This could be exacerbated by US moves to restrict the Russian oil trade,” Hynes added.

“Trump threatened secondary tariffs on Russian oil if a ceasefire with Ukraine can’t be reached. This comes after Russia proposed temporarily putting Ukraine under UN-sponsored external governance,” he added.

Hynes warned of the market’s ongoing tightening. According to data released by the Energy Information Administration (EIA) late Wednesday, inventories fell by approximately 3.3 million barrels to 433.6 million barrels, contrary to market expectations of a 1.5 million-barrel increase. #Oil Prices Increase as U.S Threats Raise Supply Risks Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces