Oil prices surged to their highest levels in over a month following US President Donald Trump's announcement of new tariffs targeting countries that conduct business with Iran. The move has injected fresh volatility into global energy markets and raised concerns about potential supply chain disruptions.

Price Movement and Market Response

Crude oil benchmarks posted significant gains as traders reacted to the tariff announcement. The following table shows the latest price movements:

West Texas Intermediate had already gained more than 6.00% over the previous three trading sessions before the latest announcement, demonstrating strong upward momentum in the market.

Trump's Tariff Announcement

Trump announced via social media that he would impose a 25% tariff on goods from countries "doing business" with Iran, stating the measure would be "effective immediately." However, the announcement lacked specific details regarding the scope of implementation or which particular goods and countries would be affected by these charges.

The ambiguity surrounding the tariff's implementation has created uncertainty in global markets, particularly given the broad language used in the announcement.

Potential Trade War Implications

The new tariffs could potentially reignite trade tensions with China, which holds dual significance in the global oil market:

• World's largest crude oil importer
• Iran's biggest customer for oil purchases

Any escalation in trade disputes between the US and China could have far-reaching implications for global energy markets and international trade flows.

Market Positioning and Risk Management

Traders are actively positioning themselves for potential price volatility amid supply disruption concerns. Market participants have been securing protection against potential price spikes at unprecedented rates, reflecting heightened anxiety about geopolitical risks affecting oil supplies.

The focus on Iran, OPEC's fourth-largest producer, has amplified concerns about potential supply chain disruptions in an already tight global oil market. These developments have contributed to the sustained upward pressure on crude prices over recent trading sessions.

Oil prices extended gains on Monday as intensifying protests in Iran sparked growing concerns about potential supply disruptions from the major OPEC producer. The civil unrest has created significant uncertainty in global energy markets, with analysts warning of substantial risks to Iranian oil exports.

Oil Price Performance

Global crude benchmarks posted solid gains during Monday trading, building on strong momentum from the previous week.

Both contracts achieved their biggest weekly rise since October, climbing more than 3% last week as Iran's clerical establishment intensified its crackdown on the largest demonstrations since 2022.

Iran Supply Disruption Risks

The ongoing civil unrest in Iran has created significant concerns about oil supply stability. The protests have resulted in substantial casualties, with a rights group reporting more than 500 deaths as of Sunday. The situation has drawn international attention, with U.S. President Donald Trump repeatedly threatening intervention if force is used against protesters.

Trump is expected to meet with senior advisers on Tuesday to discuss options regarding Iran, according to a U.S. official who spoke to Reuters on Sunday. The political tensions have raised fears about Iran's oil production capacity.

ANZ analysts led by Daniel Hynes noted in their research that "there have also been calls for workers in the oil industry to down tools amid the protests." They emphasized that "the situation puts at least 1.9 million barrels per day of oil exports at risk of disruption."

Venezuela Oil Export Resumption

While Iranian supply concerns support oil prices, developments in Venezuela are providing some counterbalance to potential price increases. Venezuela is expected to resume oil exports soon following the ouster of President Nicolas Maduro.

Trump announced last week that the government in Caracas is set to transfer as much as 50 million barrels of previously sanctioned oil to the United States. This development has triggered intense activity among oil companies seeking to establish operations for safe crude shipment from Venezuelan facilities.

Four sources familiar with the operations reported that companies are racing to find tankers and assemble logistics for shipping crude safely from vessels and Venezuela's deteriorated port infrastructure. Trading company Trafigura indicated during a White House meeting on Friday that its first vessel should begin loading within the next week.

Market Outlook

The oil market currently faces competing forces, with Iranian supply disruption risks supporting prices while Venezuelan export resumption provides potential supply relief. The situation remains fluid as geopolitical developments continue to influence global energy markets and trading sentiment.