The oil market does not believe Trump’s threats of sanctions against Russian oil
31 March 08:37
On Monday, oil markets remained indifferent to US President Donald Trump’ s threat to impose tariffs on Russian oil buyers. The shock effect of the flow of threats from the White House is beginning to fade among traders who are tired of them. This was reported by Komersant ukrainskyi with reference to Reuters.
Oil prices even fell slightly after such a loud statement: on Monday, June futures for Brent crude oil fell by 0.2% to $72.59 per barrel as of 02:28 Kyiv time, and US West Texas Intermediate fell by 0.3% to $69.18 per barrel.
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Trump’s threats no longer scare anyone
On Sunday, Trump said he was angry with Putin over his reluctance to make contact with Zelenskiy and suggested that the United States could impose sanctions on Russian oil if the Russian leader did not improve. According to Trump, it is a question of tariffs of 25-50% on goods from those countries that will buy Russian oil.
But this statement did not shake up the oil market as much as one might expect. Analysts and traders questioned its seriousness before it became a decree.
“There is an element of fatigue with the US administration’s statements on tariffs and sanctions. So I suspect that until we get something more concrete, the market will not overreact to it.”
– commented Warren Patterson, Head of Commodities Strategy at ING.
China and India are the main buyers of Russian oil, and their agreement would be crucial for any package of secondary sanctions to seriously hurt Russian oil exports.
Recent US sanctions against Moscow have forced Chinese state oil companies to avoid Russian oil: Sinopec and Zhenhua Oil have suspended purchases, and the other two have reduced volumes as they assess their compliance with the sanctions.
On Monday morning, however, several Chinese traders remained unfazed by the latest threat. Three of them, who spoke to Reuters, said Trump’s constant brinkmanship meant they were not taking his words seriously.
“We’re all used to it, oil prices don’t react. There is no point in listening to Trump anymore,”
– said one trader, speaking on condition of anonymity.
“It’s hard to say what the impact will be, as Trump always bluffs, his words have lost credibility,”
– said another.
If the threat of tariffs becomes serious, markets will pay attention to how strictly this policy will be implemented and whether the Organization of the Petroleum Exporting Countries (OPEC) will increase production to compensate for any drop in Russian exports, analysts say.
Sanctions against Venezuelan oil are working
The secondary sanctions imposed on Venezuelan oil last week could serve as a model for markets to gauge the impact of a similar set of measures against Russia, Patterson said.
Chinese buyers have already suspended purchases ahead of the sanctions coming into effect on Wednesday. Traders and analysts expect some selling to resume as buyers find workarounds, unless Beijing imposes a full ban.
