President Trump recently threatened to tax, nearly $300 billion dollars of Chinese products, by 10%. The already volatile oil market, seems to have room for some extra volatility. The volatility would largely cycle around China’s response to the U.S. tariffs. If China responds by purchasing oil from Iran, analysts speculate crude could rapidly approach $30 per barrel. Trump could impose the sanctions on the Chinese imports as soon as September 1st. Trump also threatened that he could raise the tariff, if no progress has been made towards a trade deal.
The latest episode from Iran revolves around an Iranian drone that was destroyed by a U.S. Navy ship in the Strait of Hormuz. According to the U.S. Navy, the drone had flown within 1,000 yards of the USS Boxer and had ignored “multiple calls to stand down.” The end result, the drone was immediately obliterated. Iranian officials claim they have no record of losing a drone. This episode follows another report earlier in the week when Iran said it seized a foreign tanker in the Gulf.
According to reports, Iran is quickly going to breach the Uranium-stockpile limit set by the current nuclear deal. President Hassan Rouhani of Iran has already warned that a new deal needed to be in action by Sunday June 7, 2019 or the Islamic Republic will increase enrichment of Uranium. Globally, there is much concern with the growth rate of Iran’s uranium cache, because they are just a step away from weapon-grade levels of uranium.
Early this morning the U.S. navy responded to an attack on two burning tankers after reports came that there was an attack in the Gulf of Oman. Off the coast in Iran, the USS Bainbridge was dispatched after the vessels suffered severe damage.
Tensions in the Middle East rose again over the weekend after reports indicated that four oil vessels were “attacked” or “sabotaged” at the mouth of the Persian Gulf near Fujairah Emirate, just outside of the Strait of Hormuz. The United Arab Amirates (UAE) stated that the damaged ships were two crude oil tankers owned by Saudi Arabian shipping firm Bahri, one fuel bunker barge flying a UAE flag and Norwegian oil products tanker owned by Thome Ship management. These reports are still largely unconfirmed, but come as no surprise given the recent rhetoric and geopolitical tensions facing the region.