Oil Prices Rebound Despite Trump’s Russia Tariff Threat

Copper Prices Dip as LME Withdrawals Plummet Amidst US Tariff Anticipation

London Metal Exchange (LME) copper prices experienced a downturn, falling below the $9,600 per tonne mark yesterday. This decline was triggered by a important drop in cancelled warrants, signifying a reduced demand for immediate withdrawal from LME-registered warehouses. The number of cancelled warrants decreased by 25,100 tonnes, settling at 15,875 tonnes, marking the most ample decline as March 2019. This shift is largely attributed to the re-warranting of metal in South Korean and Taiwanese ports.

The market is bracing for the implementation of a 50% tariff on US copper imports, set to take effect on August 1st. This marks the first instance of copper facing such tariffs in the United States. In anticipation of this measure, traders have been actively rerouting metal from global warehouses to the US. Consequently, copper holdings in Comex-registered warehouses more than doubled during the second quarter.

Given the US’s reliance on imported copper for its domestic consumption, the impending tariffs signal an end to this surge in shipments. This progress is expected to exert downward pressure on LME prices, as US buyers are now likely to focus on utilizing their existing inventories.

OPEC Demand Outlook Under Scrutiny

Simultaneously occurring, the Organization of the petroleum Exporting Countries (OPEC) has maintained a more optimistic outlook on oil demand for the current year. however,it remains to be seen if the group will adjust these forecasts,particularly in light of evolving market dynamics.

Brazilian Sugarcane Crush Declines, Sugar Production Slips

The latest data from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) indicates a reduction in sugarcane crushing in Central-south Brazil. Over the latter half of June, crushing volume stood at 42.7 million tonnes, a 12.9% decrease compared to the same period last year.This brings the cumulative sugarcane crush for the season to 206.2 million tonnes, down 14.1% year-on-year. Correspondingly,sugar production in the second half of June fell by 13% year-on-year to 2.8 million tonnes.

During the fortnight,approximately 53.1% of the sugarcane was directed towards sugar production, an increase from the 49.9% allocation in the same period last year. Cumulative sugar production for the season so far stands at 12.2 million tonnes, representing a 14.3% year-on-year decline.

In separate agricultural news, recent figures from China Customs reveal that the country’s soybean imports rose by 10.4% year-on-year to 12.3 million tonnes in June. Despite this year-on-year increase, imports where down 12% month-on-month. the growth in imports was largely driven by an uptick in shipments from Brazil. Cumulatively, China’s soybean imports increased by 1.8% year-on-year to 49.4 million tonnes in the first half of the year.

How might OPEC+ respond to increased Russian oil exports resulting from potential tariff changes?

The Unexpected Resilience of Crude Oil

Despite a recent threat from former President Trump to impose tariffs on Russian oil, crude oil prices have demonstrated surprising resilience, even experiencing a rebound in trading today, July 15, 2025. This counterintuitive reaction stems from a complex interplay of factors impacting the global energy market. Brent Crude and WTI (West Texas Intermediate) futures are both showing gains, defying initial expectations of a price slump. Understanding this dynamic requires a deep dive into the current geopolitical landscape and the underlying fundamentals of supply and demand.

Decoding the Tariff Threat & Initial Market Reaction

Trump’s proposal, outlined during a campaign rally, suggested a potential return to higher tariffs on Russian energy imports. the initial market response was predictable – a brief dip in oil prices as traders anticipated increased supply from Russia seeking alternative markets. However, this dip proved short-lived. Several key reasons explain this unexpected turnaround.

limited Russian Capacity to Increase Exports: Russia’s existing pipeline and port infrastructure are already operating near capacity. Redirecting significant volumes of oil away from Europe, even with tariff incentives, presents logistical challenges.

OPEC+ Production Cuts: The ongoing production cuts implemented by OPEC+ (Association of the Petroleum Exporting Countries and allies) continue to exert a significant upward pressure on prices.These cuts, designed to stabilize the market, effectively offset the potential increase in Russian supply.

Geopolitical Risk Premium: The broader geopolitical instability,especially in eastern Europe and the Middle East,continues to fuel a risk premium in oil prices. Investors are factoring in the possibility of further supply disruptions.

Strong Summer Demand: The Northern Hemisphere is currently experiencing peak summer driving season, leading to increased demand for gasoline and diesel fuel. This seasonal demand is providing a floor for oil prices.

Analyzing the Impact on Brent Crude and WTI

The divergence in response between Brent Crude and WTI is also noteworthy. Brent Crude, the international benchmark, is generally more sensitive to global geopolitical events. Its rebound has been more pronounced, reflecting concerns about wider supply disruptions. WTI, the US benchmark, is more influenced by domestic factors.

Here’s a breakdown:

1. brent Crude: Currently trading at $87.50 per barrel (as of 10:45 AM EST, July 15, 2025), up 2.3% from yesterday’s close.
2. WTI Crude: Trading at $84.20 per barrel, a 1.8% increase.

This difference highlights the varying levels of risk perception in different markets. The threat of tariffs on Russian oil,while possibly impacting global supply,is less directly felt within the US,which already has restrictions on russian energy imports.

The Role of US Strategic Petroleum Reserve (SPR)

The Biden governance’s cautious approach to refilling the US Strategic Petroleum Reserve (SPR) is also playing a role. While the SPR releases earlier in 2023 helped to alleviate price pressures, the slow pace of replenishment suggests a willingness to allow market forces to dictate prices, at least for now. This hands-off approach contributes to the overall bullish sentiment.

Historical Precedents: Sanctions and Oil Price Dynamics

looking back at previous instances of sanctions imposed on major oil producers, such as Iran and Venezuela, provides valuable context. These events consistently demonstrate that sanctions rarely lead to a sustained decrease in oil prices. Instead, they often result in:

Supply Shocks: Initial disruptions to supply, causing temporary price spikes.

Market Rebalancing: The market eventually adjusts, with other producers increasing output or consumers reducing demand.

geopolitical Risk Premium: A persistent increase in the risk premium, reflecting the ongoing uncertainty.

The situation with russia is similar. While tariffs could redirect some oil flows, they are unlikely to significantly alter the overall supply-demand balance.

Implications for Energy Investors & Consumers

The rebound in oil prices has several implications:

Energy Stocks: Investors in energy companies are likely to benefit from higher oil prices. Companies involved in exploration, production, and refining are poised for increased profitability.

Gasoline Prices: Consumers can expect to see a modest increase in gasoline prices at the pump. The extent of the increase will depend on refining margins and local taxes.

Inflation: Higher oil prices contribute to overall inflation, potentially impacting monetary policy decisions.

Alternative Energy: Increased oil prices may accelerate the transition to renewable energy sources, as they become more economically competitive.

Monitoring Key Indicators: What to Watch next

To stay informed about the evolving oil market, keep a close eye on these key indicators:

OPEC+ Meetings: Any changes to OPEC+ production targets will have a significant impact on prices.

US Inventory Data: Weekly reports on US crude oil inventories provide insights into supply and demand trends. (EIA data)

Geopolitical developments: Escalations in geopolitical conflicts could disrupt supply and drive prices higher.

Global economic Growth: Stronger economic growth typically leads to increased demand for oil.

Dollar Strength: A stronger US dollar can put downward pressure on oil prices, as oil is priced in dollars.

Case Study: The 2022 energy Crisis

The 2022 energy crisis, triggered by Russia’s invasion of Ukraine, serves as a stark reminder of the vulnerability of the global energy system. Despite initial fears of a prolonged supply shortage, the market