Oil: Secondary tariff threat – ING

Oil prices rose yesterday amid growing threats to oil supplies, ING's commodity experts Ewa Manthey and Warren Patterson note.

Oil prices to push much higher 

"ICE Brent settled almost 2.8% higher after with President Trump threatened secondary tariffs on Russia and Iran. This follows an executive order last week taking similar action against Venezuela. For now, it appears to be just a threat to Russia and Iran. However, if it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries."

"Russia exports around 7.4m b/d of crude oil and refined products, while Iran exports around 1.4m b/d of crude oil. This tool could be very effective in persuading buyers to shun the targeted oil, with the impact on the buying country’s economy potentially far outweighing the benefits of buying discounted crude oil." 

"The key buyers of Russian crude oil are China and India, whose top export markets are the US. However, taking such action, particularly against Russia, would make it harder for Trump to lower oil prices, as promised. Instead, it would push prices much higher."