The oil markets as usual are shrugging off key macro-political events. They have concluded as one misguided article put it that Trump’s threat of extreme secondary tariffs of 100 per cent on Russian oil are an instance of TACO or “Trump always chickens out” since he has warned that they are coming if Russia does not make peace, but not immediately put them into effect. In fact this is his usual way of proceeding and as his actions in Iran suggest it is no idle threat.
The simple fact is that Russia sold between 7.2-7.3 million barrels a day of oil in June 2025 and is one of the world’s largest producers. Who buys this oil? The vast majority of it goes to China and India. The promised secondary sanctions on these two countries of 100 per cent tariffs if they continue to do so is potentially severe and could more or less eliminate the ability of Russia to continue to sell this quantity of oil. That means that up to 15 per cent of daily oil exports could be possibly removed from the markets which is a huge number.
Trump has given Russia 50 days to make a peace deal and there is a good chance with Russia launching and continuing its summer offensive and no indications of a peace deal about to happen that this will not occur. So its 50 days and counting.
Other factors for the oil markets right now also suggest the potential for future volatility. The Big Beautiful Bill just passed by the Congress should in many ways juice the world’s biggest economy which is a positive for oil.
The continued pursuit of nuclear enrichment by Iran and actions by the Houthis has the potential to also lead to renewed Middle East conflict. A cease fire deal in Gaza or more military action by the US or Israel against the Houthis could reduce this potential threat.
And heavily on the negative side the Trump tariffs that are coming August 1st could potentially bring in revenue to the US but be bearish for a significant swath of the overall global economy.
Here’s my point: these are all macro-political not strictly speaking economic factors that will powerfully effect the oil markets.They all deserve to be closely followed as they dwarf any shorter term usual supply-demand issues. How much are markets effected potentially by such factors? Tremendously, yet most market participants assign only a very tangential or secondary emphasis to these factors because thety are not their area of expertise.
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