London — Oil prices climbed about 2% to a five-week high on Monday on worries supplies could decline if U.S. President Donald Trump follows through on threats to impose more tariffs on Russia and to possibly attack Iran.
Brent futures were up $1.12, or 1.5%, at $74.75 a barrel at 12:16 p.m. EDT (1616 GMT), while U.S. West Texas Intermediate crude rose $2.12, or 3.1%, to $71.48.
That put Brent on track for its highest close since February 24 and WTI on track for its highest close since February 21.
Brent’s premium over WTI fell to $3.26 a barrel, its lowest since July 2024.
Analysts have said when Brent’s premium over WTI falls below $4 a barrel, it does not make much economic sense for energy firms to send ships across the ocean to pick up U.S. crude, which should result in lower U.S. exports.
Trump said on Sunday he was “pissed off” at Russian President Vladimir Putin and will impose 25%-50% secondary tariffs on buyers of Russian oil if he feels Moscow is hindering Trump’s efforts to end the war in Ukraine.
“(Trump’s) threat on secondary tariffs on Russia and Iranian oil is a factor oil market participants are tracking, although he has indicated he is not planning to introduce them for now,” said UBS analyst Giovanni Staunovo. “But there is a rising risk of larger supply risks down the road.”
The Kremlin said on Monday that Russia and the U.S. were working on ideas for a possible peace settlement in Ukraine.
China and India are major buyers of Russian crude and their acquiescence would be crucial to making any secondary sanctions package seriously hurt exports from the world’s second-largest oil exporter.
Trump also threatened Iran on Sunday with bombing and secondary tariffs if Tehran did not come to an agreement with Washington over its nuclear program.
Iran’s Supreme Leader Ayatollah Ali Khamenei said on Monday the U.S. would receive a strong blow if it acts on Trump’s threat.
Some analysts believe that Trump may not act on his threats, a view that is putting a cap on oil prices.
IG analyst Tony Sycamore said the market felt Trump would not follow through. If enacted, he said, the tariffs would be another step toward a trade war that would weigh on global growth and demand for crude oil.
On Monday, several Chinese traders were unfazed by the latest threat. Three who spoke with Reuters all said Trump’s constant brinkmanship meant they discounted what he said.
“We expect WTI to stay in a range of $65 to $75 for now as the market assesses the impact of Trump tariffs on oil supply and the global economy, as well as the supply situation from the U.S. and OPEC+,” said Yuki Takashima, an economist at Nomura Securities.
Elsewhere, talks to restart Kurdish oil exports through the Iraq-Turkey pipeline have hit a snag as a lack of clarity over payments and contracts persists, two sources with direct knowledge of the matter told Reuters.
In another move that could limit world oil supplies, U.S. authorities notified Spanish oil company Repsol (REP.MC), opens new tab that its license to export oil from Venezuela is to be revoked. Repsol said it is talking with U.S. authorities on ways the company can keep operating in Venezuela.
SIGNS OF RISING DEMAND
In China, the world’s second-biggest economy, manufacturing activity expanded at the fastest pace in a year in March, a factory survey showed on Monday, with new orders boosting production, giving the economy some reprieve as it deals with an intensifying U.S. trade war.
In Germany, Europe’s biggest economy, inflation fell more than expected in March, bolstering the case for policymakers seeking further interest rate cuts from the European Central Bank.
Lower interest rates reduce consumer borrowing costs, which can spur economic growth and demand for oil.
*Scott DiSavino, Arunima Kumar, Robert Harvey, Yuka Obayashi, Anjana Anil & Jekaterina Golubkova; editing: Jamie Freed, Joe Bavier, Chizu Nomiyama, Jan Harvey & Andrea Ricci – Reuters
