Tariffs: Oil markets didn’t react much to President Trump’s latest threat to slap tariffs on buyers of Russian oil, as traders have grown used to his bold statements not always turning into action. While a 25-50% tariff would be significant if enforced, analysts and traders are taking a wait-and-see approach. Oil prices dipped slightly, but many Chinese buyers brushed off the comments, saying they’ve learned to tune out the noise. If the threat gains traction, markets will be watching how strictly it’s enforced and whether OPEC steps in to adjust supply.
U.S. Economy: Consumer spending rose 0.4% in February but missed expectations, while core inflation saw its biggest jump in over a year, adding to concerns about slowing growth and stubborn inflation. A University of Michigan survey showed inflation expectations hitting a two-year high, fueled by rising tariffs and trade tensions. While Fed Chair Powell downplayed long-term risks, economists warn that hot inflation could delay expected rate cuts. With weaker consumer spending power and escalating trade issues, Q1 GDP forecasts are dropping, raising worries about economic stagnation.
Rig Count: U.S. energy firms cut the number of active oil and gas rigs for the first time in three weeks, with the total rig count dropping by one to 592, down 5% from a year ago, according to Baker Hughes. Oil rigs declined by two to 484, while gas rigs increased by one to 103. The Permian Basin saw a three-rig decline, bringing its total to 297, the lowest level since February 2022.
Market Overview: Oil prices are rising to start the week as former President Trump threatens secondary tariffs on buyers of Russian oil and warns of possible military action against Iran if no nuclear deal is reached. The market is weighing the potential impact of these threats, though analysts remain skeptical they will be enforced. Uncertainty also lingers over Kurdish oil exports through the Iraq-Turkey pipeline, which remain stalled due to payment disputes.
Market Uncertainty
The stock market remains volatile as investors brace for President Trump’s April 2 tariff announcement, which could provide some clarity but is unlikely to eliminate uncertainty. The S&P 500 is on track for a 5% quarterly decline, with concerns over inflation and potential trade retaliation weighing on sentiment. Analysts have lowered their 2025 market targets, citing the risk of slower economic growth and weaker corporate earnings due to tariffs. While some see a buying opportunity if policies shift toward tax cuts, others warn that continued uncertainty could prolong market weakness. Investors are watching closely to see if the administration's next moves will stabilize markets or fuel further volatility.
Oil prices rallied during Monday’s session, with WTI climbing over 3% to settle at a five-week high of $71.48 per barrel. The market responded to President Trump’s threats of secondary tariffs on Russian oil buyers and potential military action against Iran, raising fears of supply disruptions. Additional supply concerns stemmed from the stalled negotiations over Kurdish oil exports and the U.S. decision to revoke Repsol’s license to export Venezuelan crude. Despite these bullish factors, skepticism remains over whether Trump will follow through on his threats, which could temper further price gains. Signs of rising demand from China’s strengthening manufacturing sector and expectations of European interest rate cuts also contributed to Monday’s gains.
