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Oil prices drop despite Trump's warnings about possible tariffs against Russian buyers

Oil prices fell on Monday and are heading towards a modest quarter-loss, despite warnings from U.S. president Donald Trump, who warned that he could impose secondary tariffs against buyers of Russian crude oil if he felt Moscow was blocking his efforts in ending the war in Ukraine.

Brent crude futures for June, the more active contract, fell 30 cents or 0.4% to $72.46 a barrel by 0330 GMT. Meanwhile, U.S. West Texas Intermediate oil declined 33 cents or 0.5% to $69.03 a barrel. Brent front-month, down 26 cents or 0.4% at $73.36, expires on Monday.

Both benchmarks are on track to finish the month slightly lower and report their first quarterly decline in two quarters.

Trump said that he is "pissed" with Russian President Vladimir Putin. He will impose secondary tariffs of 25%-50% on Russian oil buyers if he believes Moscow is hindering him in his efforts to end war in Ukraine. Trump claimed he would be able to impose new trade measures in a month.

There are two ways to interpret the headlines, and the drop in price. Tony Sycamore, IG's market analyst, said that the first thing to note is that Trump's threats are not being taken seriously by the market.

The second point is that Trump’s threats would, if implemented, be another step on the path towards a global trade war which will impact on growth and demand for oil.

Trump

Iran

If Washington and Tehran cannot reach an agreement over Iran's nuclear program, Washington will bomb Tehran on Sunday. Secondary tariffs may also be imposed.

OPEC+, a group that includes OPEC, Russia and its allies, will begin its monthly increase in oil production program in April. Last week, it was reported that the group would likely continue to increase oil production in May.

Yuki Takashima is an economist with Nomura Securities. She said, "We expect WTI will stay between $65 and $75 as the market evaluates the impact of Trump's tariffs on the oil supply, global economy and the supply situation in the U.S.

Saudi Arabia, the world's largest oil exporter, may reduce its crude prices to Asian buyers by a third-month low in May, following the sharp declines in benchmark price this month, traders have said.

Iran also lowered its price for light crude oil for Asian buyers, to $3.95 per barrel over the average Oman/Dubai for April.

Two sources who have direct knowledge of this matter said that the talks to restart Kurdish crude oil exports via the Iraq-Turkey pipe are at a standstill due to a lack clarity regarding payments and contracts. Reporting by Yuka obayashi and Anjana anil; editing by Saad sayeed

(source: Reuters)