The global oil market has been jolted by a sharp price surge following an aggressive new trade directive from former US President Donald Trump. The immediate imposition of a 25 per cent tariff on all countries engaging in business with Iran has sent Brent crude futures climbing over 1 per cent in 24 hours, trading above $64.50 per barrel.
Geopolitical Shockwaves Hit the Markets
On Tuesday, 13 January 2026, the price of oil spiked to its highest level since November. This significant move was triggered by a social media proclamation from Trump, who declared a "final and conclusive" order. The policy mandates a 25 per cent tariff on any and all business conducted with the United States by nations that also trade with the Islamic Republic of Iran.
This market intervention has reportedly had a more pronounced impact than the military capture of Venezuelan leader Nicolas Maduro did months earlier. Brent futures last traded above $65 two months ago before falling to around $59 in mid-December, highlighting the sensitivity of energy markets to US foreign policy statements.
The Target: Iran's Key Economic Relationships
With direct trade between the US and Iran already minimal due to existing sanctions, Trump's latest tactic aims to economically isolate Tehran by pressuring its partners. Data analysis reveals the scale of the challenge. In 2024, China accounted for a dominant 77 per cent of Iran's oil exports and was its largest overall trading partner, with bilateral trade exceeding $32 billion.
The United Arab Emirates, Turkey, Iraq, and the European Union round out Iran's top five trade partners. Collectively, these five entities were responsible for more than three-quarters (77.8 per cent) of Iran's total trade in 2024. The EU alone conducted $6.7 billion worth of business with Iran.
Expert Skepticism and Warnings of Further Volatility
Financial experts have reacted with a mixture of caution and scepticism. Susannah Streeter, chief investment strategist at Wealth Club, expressed doubt about the long-term enforcement of the tariffs but acknowledged their immediate disruptive power.
"Tariffs are Trump's well-worn modus operandi, and there's expectation he will follow through to some extent," she said. "But as we've seen before, heavy tariffs don't always stick around for long, and are often temporary negotiating tactics."
Streeter also highlighted the lingering threat of military action, noting that while trade restrictions are the current "weapon of choice," other options are being weighed. She warned that any direct strike on Iran's regime would prompt a much larger and more rapid spike in oil price volatility. For now, the market watches and waits to see how the US administration's latest geopolitical gambit will unfold.
