US oil futures broke a three-day string of losses as equity markets strengthened and President Donald Trump threatened broader sanctions against buyers of Iranian crude.
West Texas Intermediate settled 1.8% higher, at $59.24 a barrel, after Trump said that any nation or person who buys oil or petrochemicals from Iran will be subject to secondary sanctions. It was the biggest one-day increase for US oil futures in more than a week.
An American SWF would be similar to those found in Saudi Arabia and Norway, where they hold significant stakes in mining and energy assets worldwide. Trump allies argue that public investment could catalyze U.S. supply chain security, particularly in sectors key to clean energy and defense.
The Trump administration’s tariff regime, intended to boost US manufacturing and inflict punitive damage on Chinese manufacturing, has disrupted multiple industrial supply chains into the US with cascading effects across other regions. For the Middle East and North Africa (MENA) region’s oilfield services (OFS) sector, the effects are indirect but may be significant if unmitigated by national oil companies (NOCs) and OFS suppliers.
President Trump’s tariff policies – which tanked oil prices and raised the odds of a recession – are undermining America’s petroleum trade surplus. That’s not a desirable outcome for an administration fixated on fixing trade deficits. Petroleum and energy trade, in fact, is one of the few sectors in which the U.S. has a large trade surplus in the dozens of billions of U.S. dollars annually.
Over the long term, however, an effort to reduce the dependence on imports will pay off. Last week, China instituted export curbs on certain critical minerals like it did several years ago with Japan amid a trade dispute. In other words, China is no stranger to using its dominance in the sector as lever against trade partners with import dependence. China produces as much as 90% of the world’s rare earths output. This prompted a push by Western nations to diversify into their own rare earth supply chains but doing this has proven much trickier than talking about it.
On Monday morning, oil prices were recovering and traded up by about 1.5% following the weekend U.S. announcement that some electronics, including smartphones, would be exempted from the tariffs on China. Brent Crude prices traded at about $65 per barrel, while the U.S. benchmark, WTI Crude, was at just above $62 a barrel.
This points towards weaker oil demand going forward, although the prospect of U.S. action reducing Iranian oil exports played some counterbalancing role for prices. On Friday, Energy Secretary Chris Wright said the federal government was capable of halting oil exports from Iran. “We can follow the ships leaving Iran. We know where they go. We can stop Iran’s export of oil,” Wright said.
Oil executives had identified efforts by New York and other states to penalize the industry for its greenhouse gas emissions and contributions to climate change as a top concern during a meeting with the president at the White House last month, according to people familiar with the matter. It’s an example of how the industry is getting much of what it wants from the administration, even as Trump’s global tariffs have triggered a sharp drop in crude prices over the past week.
The angry mutterings at the Permian Basin Petroleum Association’s “Spring Swing” golf tournament this week weren’t all about missed putts or lost balls. The Texas oilmen on the fairways had a more serious concern: The president they helped elect was tanking oil prices.
It’s official: President Donald Trump has announced sweeping tariffs on friends and foes alike, with the minimum rate at 10% and higher versions of between 20% and as much as 49%. Oil prices took a dive after the announcement, predictions of a grim economic future multiplied, and countries around the world vowed to retaliate. It’s a game of tariffs with a twist: energy imports were exempted from the tariffs.