Oil prices have experienced fluctuations due to geopolitical developments, particularly President Donald Trump’s renewed sanctions on Iran and escalating trade tensions between the U.S. and China. On February 4, 2025, President Trump reinstated his “maximum pressure” campaign against Iran, aiming to eliminate its oil exports entirely to prevent Tehran from acquiring nuclear weapons. This policy could impact approximately 1.5 million barrels per day of Iranian crude exports.
The announcement led to a brief surge in oil prices, with Brent crude futures rising to $77.20 per barrel, the highest level since November 2014. Concurrently, trade tensions between the U.S. and China have intensified. China announced retaliatory tariffs on U.S. imports, including oil, liquefied natural gas, and coal, in response to U.S. tariffs on Chinese exports. This escalation raised concerns about a potential trade war, which could disrupt global oil supply chains and affect market stability.
Despite the initial surge following the Iran sanctions announcement, oil prices have since declined. Brent crude futures fell by 0.51% to $75.81 per barrel, and U.S. West Texas Intermediate crude decreased by 0.36% to $72.44 per barrel. This decline is attributed to rising U.S. crude inventories and concerns over a potential trade war between the U.S. and China, which could dampen global economic growth and reduce oil demand. While geopolitical events have initially influenced oil prices, market reactions have been mixed, reflecting the complex interplay between supply constraints and economic uncertainties.