Oil tops $100 on war and tariff threats
Oil climbed above $100 a barrel as the U.S. blockade of Iranian ports and President Trump’s threat of 50% tariffs on China over reported arms shipments to Iran pushed risk premiums higher. ( ) At the same time Chinese stocks and bonds rose together as haven demand flowed into local assets, and U.S. CFOs told a CNBC survey that tariff refunds are unlikely to translate into lower consumer prices. ( )
Oil jumped above $100 a barrel after the United States moved to blockade Iranian ports and Donald Trump threatened new 50% tariffs tied to Iran. (cnbc.com) Brent crude settled at $99.36 on April 13 after rising more than 4%, and United States benchmark West Texas Intermediate climbed above $104 in trading as the blockade took effect at 10 a.m. Eastern time on Monday. United States Central Command said the order applies to vessels “entering or departing Iranian ports and coastal areas.” (cnbc.com) Trump said on April 13 he would hit China with 50% tariffs after a report said Beijing was preparing a weapons shipment to Iran. He had already posted on April 8 that any country supplying military weapons to Iran would face a 50% tariff on goods sold into the United States. (cnbc.com; politico.com) The oil move is centered on the Strait of Hormuz, the narrow shipping lane beside Iran that carries about one-fifth of global oil supply. Indian Express reported tankers were already avoiding the area as traders priced in a higher risk of disruption. (indianexpress.com) That same shock is reshaping other markets. Bloomberg reported that Chinese stocks and government bonds have been rising together, with the 90-day correlation between the CSI 300 Index and a Bloomberg China Treasury return index turning positive from March 18, a pattern not seen in about two years. (moneycontrol.com; bloomberg.com) Bloomberg also reported that investors have been treating Chinese assets as a relative haven during the United States-Iran war, even though China is the world’s largest crude importer. A separate Bloomberg report on March 31 said Chinese stocks had fallen 4.1% since the conflict began in late February, compared with drops of more than 10% in South Korea, Japan and India. (bloomberg.com; bloomberg.com) In the United States, finance chiefs told CNBC that even if companies recover tariff payments, shoppers should not expect lower prices. CNBC said 12 of 25 chief financial officers surveyed planned to apply for refunds, and none said they would directly pass that money to customers. (cnbc.com) The tariff refund issue stems from a court fight over Trump’s trade agenda. CNBC reported that the Supreme Court struck down a large portion of the reciprocal tariffs and a judge later ordered the government to prepare for potentially billions of dollars in refunds to importers who paid them. (cnbc.com) Analysts told Al Jazeera that a blockade aimed only at Iranian ports would still ripple through global energy markets because shipping, insurance and routing costs can jump before physical supply is cut. For now, the price of oil is reflecting that risk premium as much as any confirmed loss of barrels. (aljazeera.com)
