Oil touched the highest level since November after US President Donald Trump said he’s imposing a 25% tariff on goods from countries “doing business” with Iran after a wave of deadly unrest in the OPEC member.
Brent traded near $64 a barrel after jumping more than 6% over the previous three sessions, while West Texas Intermediate was below $60.
Trump said on social media that the new duty would be “effective immediately,” without providing details about the scope or implementation of the charges.
Oil has gained ground in the early new year period, following a run of five monthly losses spurred by expectations for a glut. The climb has come amid a US intervention in Venezuela, with Washington’s capture of leader Nicolás Maduro, followed by the worsening wave of unrest in Iran. Still, authorities in Tehran have said they have now quelled the protests.
While price moves on Tuesday were relatively muted amid a lack of clarity on Trump’s latest edict, any new tariffs threaten to reignite a trade war with China, the world’s top crude importer and the buyer of about 90% of Iran’s total exports. For now, traders are seeking protection against spikes, boosting the volume of Brent call options to an unprecedented level on Monday.
The immediate impact of the Iran tariff threats “may be a geopolitical premium on crude prices,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “But sustained direction will depend on whether this rhetoric solidifies into enforceable policy, and whether it sparks measurable supply disruptions or broader trade retaliation that dents demand growth.”
The possibility of a disruption to Iran’s daily exports, which account for just under 2% of global demand, has tempered some of the concerns over the global glut. Iranian stockpiles at a key export terminal are about a fifth lower since the start of the year, a possible sign crude is being moved out of harm’s way amid the unrest.
Elsewhere, supply from Kazakhstan is being hampered by bad weather, maintenance, and damage by Ukrainian drones on Russian infrastructure.
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