The negative influence of trade wars is expanded on below, but the pressure oil prices have been undergoing lately have found a little more weight. The success enjoyed by President Trump in leading the Gaza peace deal has emboldened him to once again metaphorically look into the eyes of Russia’s Vladimir Putin and ask him, “well?” The recalcitrant Russian leader will obviously play for time, as his normal operandi historically suggests, and none can tell whether if another bout of soothing language and fawning flattery will appease the US President. However, the optics for those of us not at the power table, suggest a shifting of closing walls for Russia. The timing of the United Kingdom’s banning of business with oil giants Rosneft and Lukoil along with sanctions on ships carrying and Chinese refiners who shift and process Russian oil cannot be just coincidence. Neither can the meeting in Washington where Ukraine’s Volodymyr Zelensky appeals for energy aid as his country approaches winter, but far more importantly sues for permission to buy and use Tomahawk missiles. Drone attacks on Russian refineries and crude oil export terminals are finding greater success but the so much more powerful and accurate US long-range weapons could wreak havoc if Kyiv’s cyber soldiers get their hands on some new toys. Frankly, it is doubtful such weaponry will be allowed into the warfare mix, the strain on US/Russia relations would be a DefCon moment, as immortalised in so many Hollywood films. Additionally, this US Administration, by its every action, desires lower oil prices, therefore, the sight of burning crude piers from Vladivostok in the East and Novorossiysk in the South-West would be intolerable. Coming off the telephone yesterday, Trump announced he would be meeting Putin in Budapest in the near future. It sounds like another Alaska moment, where absolutely nothing was achieved apart from Russia gaining more time. This will be the play again if a Hungary meeting goes ahead. Yet the additional sanctions, the domestic civil unrest within Russia against the war and a world surrounded by predictions of an oil glut in 2026, is starting to make the prospect of a shut-off from Russian exports less inflammatory for sentiment.

Time to plate up the tariff condiments

We would hazard a guess that when you turned on your screens at the start of business in 2025, you were more than prepared for some quite extraordinary developments under a new Trump Administration. However, in a list of things that you thought you would never hear and things you thought would never move a market is a US President threatening another country with a cooking oil ban. The new verbosity surrounding an unlikely import is part of a tit-for-tat attitude being adopted by Washington, and in fairness, the response does seem to stem from a new wave of belligerence from Beijing and non-performance in trade promises. According to the American Soybean Association, China is the world’s largest soybean buyer, importing an average of 61 percent of the world’s traded soybean supplies and part of that being 54 percent of US exports valued at or around $13 billion in 2024. Where the issue has boiled over is that since May of this year, not one US soybean has made its way to China. This has caused incredible hardship in some of the farming communities of the US, hence the agricultural style of revenge Trump has meted out, because the US takes over 40 percent of China’s cooking oil exports. Beyond the strangeness of the foodstuff bartering lies an element of self-infliction. Because of tariffs, China’s imports of US soy have become incrementally more expensive and so it has sought supply elsewhere. The minutiae and attention to things normally found in the back of one’s cupboard outlines a trade war that can take many turns of events, involving many commodities with each one being subject to a volte face when hotheads cool.

There are, of course, all different types of thrusts and withdrawals as seen in the lunge and riposte of fencers, with the intended outcome of never over-committing to a feint or flèche. The US Treasury Secretary, Scott Bessent, deployed such a move when referring to a ninety-day rollover of the current tariff deal and how it might just be extended to being more longer-term. Walking back tariff threats, or at least publicly considering them, is now part and parcel of negotiations, but over the last week it has become patently obvious that the sore point for the US is China’s sudden crackdown on exports of rare earth materials. Any sort of extension in a tariff deal on the American part would only come with the resumption of free-flowing access to rare earths. Why Beijing has chosen now to pinch on the sensitive pressure point of critical minerals is none too clear other than leverage, but the effect, should the export ban become entrenched, will be nothing less than catastrophic for the US industries that rely on the current supply chain. Even the CEO of JP Morgan, Jamie Dimon, chirped in by saying, “it has become painfully clear that the US has allowed itself to become too reliant on unreliable sources,” when asked about the issue and went on to warn how it posed a national security threat. 

Yet, and in remarkable repetition of the over-used phrase often rolled out by the US, China insisted the move was to guard against threats to its national security. A spokesperson from the Chinese Commerce Ministry was quoted by Al-Jazeera at the beginning of this week on how minerals exported to one country have been found to be making their way into either countries or industries of which it did not approve. “This has caused significant damage or posed potential threats to China’s national security and interests, adversely affected international peace and stability, and hindered global non-proliferation efforts.”

The oil market smells trouble, it hates trade wars and while we might get a ‘Taco’ or in fact a ‘Xaco’ (Xi always chickens out), the frequency and broad spectrum of places to find a fight seems to be increasing. The soft effect of a drain in global trade confidence will eventually turn into the hard data of reduced trade and goods, managing to still be exchanged, becoming more costly. As seen in a Reuters analysis piece this week, Harvard University researchers have been tracking the price of 359,148 goods, from carpets to coffee, at major online and brick-and-mortar retailers in the United States and found imported goods prices have risen by 4 percent since Washington’s tariff policy was introduced. Export prices in a myriad of countries are increasing and according to some analysts there is data lag and how such inflation is set to continue and possibly increase. Given the port fees China and the US now charge on each other as part of the new leg in tariff volleys and how freight rates associated with oil cargoes have shot up, it does not matter if it is soybeans, cooking oil, or the little paper umbrellas seen in cocktails; less trade equals less demand and oil prices are currently priced in reflection.

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