Oil prices jump as new Trump tariff threats placed on Iran trade partners
Oil prices rose to their highest level since November after Donald Trump imposed a 25 percent tariff with immediate effect on all countries “doing business with the Islamic Republic of Iran.”
Brent Crude futures are trading above $64.50 (£47.85) as of 09:00 GMT on Tuesday, after rising more than 1 per cent in the last 24 hours. Futures last traded above $65 two months ago and fell as low as $59 in mid-December.
This means this latest geopolitical intervention by Mr. Trump has had a greater impact on oil prices than the military capture of Venezuelan leader Nicolas Maduro.
Although no official policy has been presented so far, the president wrote on social media: “Any country doing business with the Islamic Republic of Iran will pay a 25 percent customs duty on all business with the United States. This Order is final and final.”
There does not currently appear to be a definitive assessment as to whether a 25 percent tariff will be applied to countries whose current tariff level is below this figure, or whether an additional rate will be applied on top of the existing rates.
Given current sanctions on Iran, trade between the United States and Iran is minimal, which explains Mr. Trump’s effort to pressure Tehran by targeting its trading partners.
Data from Kpler shows that China will account for 77 percent of Iran’s oil exports in 2024.
Bloomberg notes that the Asian country is also Iran’s largest trading partner, with trade between the two worth more than $32 billion in 2024. Additionally, the top five include the UAE, Türkiye, Iraq and the EU; The EU does business worth $6.7 billion, which is 5.4 percent of Iran’s entire trade.
These five individuals accounted for more than three-quarters (77.8 percent) of Iran’s total trade in 2024.
Susannah Streeter, Wealth Club’s chief investment strategist, cast doubt on whether the Trump administration will follow through on the threats, but noted that additional actions could cause oil prices to change much faster and more significantly than in the past.
“More burdensome trade restrictions are for now the US administration’s weapon of choice to pressure the Iranian regime, but options for military action are still being discussed,” he said.
“Tariffs are Trump’s stereotypical modus operandi and there is an expectation that he will implement them to some extent, but as we have seen, heavy tariffs do not always stay in place for long and are often temporary negotiating tactics. Oil prices are still well below the average over the past 12 months. An attack on the Iranian regime could lead to another major spike in volatility.”
