The price of oil has spiked to its highest level since November, in the wake of Donald Trump placing an immediately effective 25 per cent tariff on all nations “doing business with the Islamic Republic of Iran“.
Brent Oil futures are trading at more than $64.50 (£47.85) on Tuesday as of 9am GMT, following a spike of over 1 per cent across the past 24 hours. Futures last traded above $65 two months ago, before falling as low as $59 in mid-December.
It means this latest geopolitical intervention by Mr Trump has had a bigger impact on oil prices than the military capture of Venezuelan leader Nicolas Maduro did.
Though there has been no official policy presented so far, the president wrote on social media: “Any country doing business with the Islamic Republic of Iran will pay a tariff of 25 per cent on any and all business being done with the United States of America. This Order is final and conclusive.”
There does not appear to be any conclusive assessment at present on whether it would be a 25 per cent tariff on nations whose current tariff level is below that number, or an additional rate on top of existing rates.
Given existing sanctions on Iran, trade between the US and Iran is minimal, which explains Mr Trump’s effort to pressure Tehran by targeting its trading partners.
Data from Kpler show that China accounted for 77 per cent of Iran’s oil exports in 2024.
Bloomberg reports that the Asian nation is also Iran’s largest trading partner, with more than $32bn in trade between the two in 2024. Also in the top five were the UAE, Turkey, Iraq, and the EU – the latter doing $6.7bn of business, equivalent to 5.4 per cent of all of Iran’s trade.
Those five made up more than three-quarters (77.8 per cent) of Iran’s total 2024 trade.
Susannah Streeter, chief investment strategist at Wealth Club, cast doubt on the Trump administration following through on the threats, though noted that additional action could drive oil prices to shift far more rapidly and more notably than in the past.
“More onerous trade restrictions are for now the weapon of choice of the US administration, to put pressure on Iran’s regime, but options for military action are still being weighed up,” she said.
“Tariffs are Trump’s well-worn modus operandi, and there’s expectation he will follow through to some extent, but as we’ve seen before, heavy tariffs don’t always stick around for long, and are often temporary negotiating tactics. Oil prices are still well below the average over the past 12 months. A strike on Iran’s regime would prompt another big spike in volatility.”
