**Oil Markets Bet Against Trump’s Russia Sanctions Threat**
The global oil market has taken a surprisingly calm view of President Donald Trump’s threat to impose severe sanctions on Russia, despite the potential for massive economic disruption. The reason? Traders believe that such a move would lead to a sharp increase in energy prices, hurting American consumers and ultimately damaging Trump’s own popularity.
Trump made his warning at the White House on Monday, stating that he would hit Moscow with “very severe” tariffs if a deal to end the war in Ukraine is not reached within 50 days. The new sanctions, if enacted, would include 100% tariffs on Russian exports to the US and 100% secondary tariffs on countries buying oil from Russia.
**Russia’s Oil Empire**
For energy markets, the stakes are extremely high. Russia produces nearly a tenth of global oil supplies, making it the world’s third-largest producer behind the United States and Saudi Arabia. The country exported over $13.6 billion worth of crude oil and refined products in June alone, with China, India, and Turkey as its main buyers.
**The Risks of Secondary Sanctions**
Effective US secondary sanctions on Russian oil would likely lead to a severe energy price shock, putting upward pressure on global inflation. This could ultimately hurt American consumers, something Trump is loath to do. The market is essentially betting that the more extreme a Trump threat is, the less likely it is to be realized.
**A Risky Bet**
Investors are taking a calculated risk by betting against Trump’s sanctions threat. While it may seem like a safe bet, history has shown us that such predictions can go terribly wrong. The consequences of miscalculating could be severe, with global energy prices surging and economic chaos unfolding.
In summary, the oil market is calling Trump’s bluff on Russia sanctions, but this is no time to get complacent. The risks are real, and the potential consequences should not be taken lightly.
Read More @ www.reuters.com
