Crude Chaos: Trump’s Tariff Threats & Russia Deadline Send Oil Markets into Tailspin

Geopolitical tremors rock energy markets as crude takes a hit.

Trump's tariff gambit meets Russia's supply deadline—oil traders brace for volatility.

Another day, another excuse for Wall Street to overreact about commodities.

Trump pushes tariffs on Russian crude buyers

Trump’s pressure campaign is focused directly on countries that continue importing Russian oil. The two biggest buyers are China and India. While China’s position hasn’t budged, India has shown signs it may adjust its approach if Washington follows through.

Analysts at JP Morgan noted that up to 2.3 million barrels per day of Russian oil could be affected if India complies with the threat. In contrast, China is expected to ignore the U.S. warnings. Vandana Hari, founder of oil market analysis firm Vanda Insights, added that the recent supply-risk premium of $4 to $5 per barrel could remain unless Russian President Vladimir Putin makes a MOVE toward peace.

Trump’s economic team is reinforcing the message abroad. Treasury Secretary Scott Bessent told reporters during a press conference in Stockholm that China “could face huge tariffs” if it continues importing Russian crude. That WOULD put massive pressure on Beijing, which remains the top buyer of Russian barrels.

Not everyone agrees that the market will feel the full impact of these threats. Barclays analyst Amarpreet Singh doesn’t expect Russian barrels to disappear soon. Singh explained that Russia has been dodging Western sanctions since its invasion of Ukraine, saying the Kremlin’s export channels have proven “resilient to the price cap mechanism.” Singh also noted that TRUMP has consistently prioritized keeping energy prices low throughout his time back in office.

Fed decision keeps investors on edge

While the oil market was bracing for fallout from Trump’s ultimatum, U.S. bond markets stayed mostly flat as investors waited on the Federal Reserve’s interest rate announcement. At 4:19 a.m. ET, the 10-year Treasury yield sat at 4.33%, unchanged. The 2-year note dropped slightly to 3.87%, and the 30-year slipped to 4.867%.

The Federal Reserve is widely expected to leave interest rates where they are. Traders are pricing in a 98% chance that the central bank keeps its benchmark rate in the 4.25% to 4.5% range, based on CME Group’s FedWatch tool. The bigger focus is on Fed Chair Jerome Powell’s press conference scheduled after the decision is released.

Deutsche Bank analysts wrote in a client note that Powell “is unlikely to remove a September rate cut from consideration nor intentionally raise the probability of that outcome.”

Despite Trump pushing for lower rates in recent months, the analysts believe inflation data will keep the Fed cautious. Their forecast sees the first rate cut happening in December, with an additional 50 basis points in reductions expected during Q1 2026.

Powell’s remarks will be closely followed for any signs of future policy changes, especially with Trump applying public pressure for rate cuts to stimulate the economy. The President has repeatedly criticized Powell’s decisions and hinted at using all tools available to bring down inflation and energy prices.

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