Trump Again Dominates Oil Trading As Venezuela Inspires Latest Round Of Tariffs

Analysts now think the tariff craze may lead to further oil gains: File Imager/Pixabay

U.S. president Donald Trump’s multi-country tariff spree, the most recent of which was a threat to impose a 25 percent tariff on countries that buy oil and gas from Venezuela, was said to be the key factor in oil prices on Monday rising more than 1 percent.

Brent settled up 84 cents, or 1.2 percent, to $73 per barrel, while West Texas Intermediate settled up 83 cents, also 1.2 percent, at $69.11.

“We’ve got a little bit of a supply shock of Venezuela losing barrels to the world market, so that’s definitely a bullish force,” said Dennis Kissler, senior vice-president of trading at BOK Financial.

But capping the gains was Chevron being given until May 27 by Washington to wind down its oil operations and exports from Venezuela (initially it had been given 30 days from March 4 to do so).

Trump also contributed to market uncertainty by yet again delaying tariffs he earlier said would go into effect on April 2, including charging 25 percent on imports of pharmaceuticals, cars and lumber; however, Monday’s oil gains were part of a larger bullish market trading activity that suggested a nascent resilience to threats from (or an understanding of the underlying negotiating strategies of) the brash billionaire.

Given that Venezuelan oil is mostly important to China, Matt Smith, lead oil analyst of the Americas at Kpler, said, “This announcement by the Trump administration appears to be one more action targeting China.”

Washington’s existing tariffs against China include 20 percent tariffs across all Chinese goods entering the United States, with steel and aluminum imports facing an additional 25 percent tariff.

Leo Mariani, an analyst at Roth, told clients in a note, “We expect oil prices to go higher in light of this news and may rise further if Trump follows through with this proclamation.”

In other Trump-dominated oil news on Monday, Hayan Abdel-Ghani, oil minister for Iraq, disclosed  that oil tankers from Iran seized by U.S. forces in the Gulf were using forged Iraqi documents to evade sanctions placed against the Islamic republic.

The Trump administration’s pressure against Iran to eliminate its oil export revenue is a bid to slow its nuclear ambitions – a concern long held by the U.S., Europe, and Israel - and perhaps lead to a new nuclear accord, although Iran’s supreme leader Ayatollah Khamenei has ruled out talks with Washington.