Oil Prices Rise on Israeli Strike and Trump’s Tariff Proposal

Crude oil prices experienced a modest uptick in early trading on March 15, 2024, following an Israeli military strike on Hamas leaders in Doha, Qatar, and a proposal from former U.S. President Donald Trump for the European Union to impose a 100% tariff on China and India to deter their purchases of Russian crude oil. At that time, Brent crude was valued at $67.09 per barrel, while West Texas Intermediate traded at $63.32 per barrel, both reflecting an increase of less than 1% from the previous day’s close.

The Financial Times reported earlier this week that EU officials are contemplating further sanctions on Russia after a series of 18 sanctions packages have failed to alter Moscow’s determination to achieve its objectives in Ukraine, which it refers to as a special military operation. Trump has suggested that instead of sanctions, the EU could employ tariffs targeting the two largest purchasers of Russian crude—China and India. Such a strategy could complicate trade relations, particularly as China ranks as the EU’s second-largest trading partner after the United States.

As the situation unfolds, analysts express concern over the potential impact of tariffs on international oil prices. According to LSEG analysts, “The expansion of secondary tariffs to other major buyers such as China could disrupt Russian crude exports and tighten global supply, a bullish signal for oil prices.” Nevertheless, they also caution that aggressive measures may conflict with the U.S. administration’s efforts to manage inflation and influence the Federal Reserve’s decisions regarding interest rates.

Impact of Israeli Attack on Oil Prices

Reports from Israeli sources indicate that the Israeli Defense Forces (IDF) targeted Hamas leaders in Doha during their latest ceasefire negotiations. Qatar’s Prime Minister expressed concern that the strike could undermine ongoing peace efforts, yet the immediate effect on oil prices was relatively muted. This reaction highlights ongoing uncertainties regarding global oil demand.

Despite geopolitical tensions, market analysts have noted a prevailing expectation of weak demand for oil. The lack of significant movement in prices suggests that traders are weighing these international developments against an overall subdued market outlook. As various forecasts continue to circulate, the oil market remains in a state of careful observation and speculation regarding future price movements.

The combination of international military actions and trade policy proposals has created a complex landscape for oil markets, raising questions about the future trajectory of prices amidst shifting geopolitical dynamics.