Crude market volatility reflects Trump administration’s unpredictable war moves, says analyst

In response to soaring global petroleum prices, the US has temporarily lifted sanctions to permit the sale and delivery of Iranian oil, allowing for up to 140 million barrels of crude to enter global markets over the coming weeks.

The measure applies only to oil and petroleum products already stored at sea and loaded onto tankers before March 20, the date on which the US Treasury Department approved it.

The authorisation runs for one month only, expiring on April 19, and aims to quickly increase supply amid rising global oil prices as the Middle East conflict enters its fourth week.

According to Treasury Secretary Scott Bessent, the move is tightly controlled and short-term, The Washington Post reported, and only applies to oil effectively stranded offshore, in order to ease global supply pressure without broadly lifting sanctions on Iran.

This approach mirrors previous actions by the US to manage market volatility, including temporarily easing restrictions on Russian oil. It was met with apprehension by many analysts and policy makers who argued it would provide a cash infusion to the Iranian regime, which could bank $14bn from the move.

Bessent defended the Trump administration’s decision in an interview with NBC News, saying that the US was using Iran's “oil against them” by lifting sanctions on 140 million barrels. He stated that oil was going to the Chinese anyway. “So which is better?” he questioned. “If oil prices spiked to $150 and they were getting 70% of that, or oil prices below $100? It’s better to have them where they are now.”

According to the managing principal at Obsidian Risk Advisors, Brett Erickson, this move directly contradicts Trump’s own statements that Washington is considering winding down this conflict. “You don’t unsanction Iranian oil if you’re winding down. This is the action of an administration that has no exit ramp and knows it. The word for that is desperation,” Erickson said as quoted by the Washington Post.

Boris Aronstein, an independent oil and gas analyst, noted that the volatility of crude prices since the beginning of the military conflict in the Middle East reflected the unpredictable actions of the Trump administration.

As Aronstein observed, crude prices soared with the start of the war in the most oil-rich area of the world – a global hub in terms of production and transportation of both oil and liquefied natural gas (LNG) in the market. At the time, the market, in general, was saturated with oil, with even a slight excess of supply over demand and fairly stable prices around $65-75 per barrel of Brent.

“Now crude price fluctuations are reflecting Trump's statements. Trump says that the war should be ended literally in the next few days and prices are going down,” Aronstein said in an interview on The Breakfast Show on March 22. “Then there happens the bombing of oil and gas facilities, for example, South Pars. Prices soar again. Brent is now trading at $112.”

Global implications

According to Aronstein, the current situation is complicated by the fact that the conflict has already passed a “fairly mild scenario”, which provided for the end of hostilities in three weeks and the return of oil prices to $65-85 per barrel. “We have passed this scenario,” he says. “We are now in a moderately tough scenario, where the price of oil ranges from $100 to $120 per barrel.” In addition to industries that are directly affected by oil prices, such as logistics and air transportation, industries that are indirectly affected are beginning to suffer.

There is already a danger of food and fresh water supply interruptions in countries like Abu Dhabi and Dubai. If the situation continued, Dubai, which receives most of its agricultural imports through the Persian Gulf and not overland, could end in a humanitarian crisis.

If the hostilities continue for another 3-4-5 weeks, then industries with the highest added value, which require petrochemical products, will be affected, says the analyst. “These are building materials, packaging materials, synthetic fabrics... And this will be a very strong blow to the industry. I think that in this case, a global recession is almost inevitable. Now we are at a turning point.”

However, Trump continues to issue unpredictable declarations, saying that the war is about to end. Aronstein argues that such statements are groundless. He says the only position now for Trump to declare victory would be the seizure of Iran’s enriched uranium, but this is a ground operation, which could be very costly for the US.

China and Africa

Aronstein believes that China is better prepared to weather the fallout from the Middle East conflict. He offers his own observations on why China is better off than other importers in Southeast Asia. His first point is that China has a very diversified economy: 25% of Chinese cars manufactured and sold in China are electric vehicles (EVs), and China is also the world’s leading exporter of solar panels, producing 85-90% of all solar panels in the global economy.

“Therefore, from this point of view, China turned out to be much better prepared than other countries, even than the United States. The second point that gives a certain stability to China against the backdrop of the war in the Persian Gulf is that China has huge strategic oil reserves, more than a billion barrels. That's a billion two hundred million,” says Aronstein, adding that this amount will be enough for 117 days of uninterrupted supply to China's industry and agriculture.

And there is also the third point, he explains: China has built its economic policy in such a way that it can very easily switch to other sources of oil. The analyst says that these are the countries of Africa and North Africa. According to Aronstein, it is not for nothing that China used a “soft power approach” to cultivate and establish relations with African states, primarily with those countries that are commodity exporters.

“These three points make China much more stable and much less susceptible to any hesitations in foreign policy. China is indeed sitting on top of a mountain and watching the corpse of its enemy float below,” says the analyst.