WTI Soars Nearly 3% on Trump’s Russia, Iran Threats

U.S. benchmark crude oil prices soared 2.65% on Monday, with West Texas Intermediate (WTI) hitting $71.20, up $1.84 at 11:47 a.m. ET on fears Trump will follow through on more tariff threats for buyers of Russian oil, combined with the prospect of a military response to Iran. 

Brent crude was also climbing on Monday, up 1.47% to $74.71.

Two geopolitical deals are in play here. The first is a ceasefire deal over Russia-Ukraine, and the second focuses on a new deal over Iran’s nuclear program.

Late on Sunday, Trump warned that he could impose secondary sanctions on Russia’s energy sector if the U.S. and Russia are unable to reach a ceasefire agreement regarding the war in Ukraine.

“If Russia and I are unable to come to an agreement to stop the violence in Ukraine, and if I believe Russia is responsible — which may not be the case — but if I believe they are to blame, I will impose secondary tariffs on all Russian oil exports,” Trump told NBC.

Trump lashed out at remarks made by Putin, who questioned the legitimacy of Ukrainian President Volodymyr Zelensky’s government and suggested that a change in leadership may be necessary for a peace deal to be valid. Putin has consistently emphasized that elections in Ukraine will have to precede any ceasefire deal.

Even more worrying to markets, Trump earlier on Monday threatened to bomb Iran if a new nuclear deal is not agreed.

“If they don’t make a deal, there will be bombing,” Trump said in a telephone interview with NBC. “It will be bombing the likes of which they have never seen before.” The U.S. president said, however, the two sides were engaged in negotiations, which did not prevent him from extending a 25% indirect tariff threat to Tehran.

Trump’s remarks follow Iran’s official refusal to engage in direct negotiations with the U.S. Tehran emphasized that its willingness to negotiate would depend on the actions of the U.S.

In the meantime, oil and gas executives in the Dallas Fed Energy Survey published last week said they expected WTI to average $68 per barrel for the six-month forecast, $70 per barrel for 12 months and $74 for the two-year forecast, reaching $80 in five years.