DTN Oil Update
Oil Up 2% as Trump Warns of Tariffs on Iran Trade Partners
SECAUCUS, NJ (DTN) -- Crude futures jumped more than 2% Tuesday as U.S. President Donald Trump's threat to impose tariffs on any country that does business with Iran spooked a market already on the edge over civilian protests that could disrupt the flow of oil from one of the Middle East's largest suppliers.
Trump raised the prospect of a 25% tariff on Iran's trading partners in a social media post on Monday. Oil is Iran's largest export, with China reportedly purchasing more than 80% of the crude shipped by the Islamic Republic in 2025.
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As OPEC's fourth-largest producer with an output of 3.2 million bpd, Iran has had limited customers for its oil due to U.S. sanctions imposed since Trump's first presidency in 2018. Aside from China, Iran's trading partners include the UAE, Iraq, Turkey, India, Germany and Russia, reports said.
Crude prices ended 2025 down by about 20% on concern over a global supply glut, which the International Energy Agency warned could reach 3.8 million bpd this year. Since the start of 2026, the market has mostly rallied; however, developments in Iran and Venezuela -- another OPEC member whose production, between 800,000 bpd and one million bpd, has come under U.S. control -- have also been a factor. Prior to the tariffs, he warned against Iran's business partners. Trump hinted that the U.S. could resort to military action against Iran if it killed civilian protestors. Tehran responded, saying it was prepared for war.
"We might be at an equilibrium now on supply concerns, with the Iranian production at stake making up more than 80% of the projected glut for this year," observed John Kilduff, partner at New York energy hedge fund Again Capital. According to reports on Monday, oil industry workers were among those who had joined nationwide strikes in Tehran.
In the U.S., data released this morning by the Bureau of Labor Statistics revealed that inflation remained stable in December, with the Consumer Price Index up 2.7% year-on-year. The Energy Commodities Index slipped 0.4% from November, down 3% year-on-year.
In Tuesday morning trade, NYMEX WTI for February delivery rallied by $1.25, or 2.1%, to $60.75 bbl. The March ICE Brent futures contract rose $1.23, or 1.9%, to $65.10.
Both WTI and Brent have jumped by some 9% over the past four sessions.
Among refined products, the front-month ULSD futures climbed by $0.0437 to $2.1981 gallon. Front-month RBOB advanced by $0.0190 to reach $1.8410 gallon.
The U.S. Dollar Index rose by 0.164 points to 98.79 against a currency basket.