Oil prices experienced a notable increase yesterday, driven by escalating concerns regarding potential threats to global oil supplies. ICE Brent crude closed nearly 2.8% higher following President Trump’s announcement of possible secondary tariffs targeting Russia and Iran. This follows an executive order issued last week, which aimed at similar punitive measures against Venezuela.
While the threats are currently hypothetical, they create significant upward pressure on the market given the large oil export volumes from both Russia and Iran. Russian oil exports amount to approximately 7.4 million barrels per day (b/d) when including both crude oil and refined products, while Iran’s exports hover around 1.4 million b/d of crude oil. Such tariffs could effectively dissuade buyers from sourcing oil from these countries, as the economic fallout for those countries purchasing discounted crude oil could outweigh the short-term benefits.
Notably, China and India are key consumers of Russian crude, and both have major trade connections with the United States. Implementing tariffs against Russia might complicate Trump’s efforts to reduce oil prices, potentially resulting in significantly higher prices instead. In the agriculture sector, the latest Prospective Plantings report from the US Department of Agriculture (USDA) indicates a projected decline in soybean acreage for the current year, while corn plantings are expected to rise.
The USDA anticipates that soybean acreage in the US will drop to 83.5 million acres in 2025, down from 87.1 million acres in 2024. Conversely, corn acreage is set to increase to 95.3 million acres, surpassing both last year’s figure of 90.6 million acres and market predictions. Amid retaliatory tariffs from China on US soybeans, it appears that American farmers may prefer corn over soybeans in their planting choices.
The USDA’s quarterly stocks report also shed light on inventory levels as of March 1, revealing that corn inventories stood at 8.15 billion bushels, a decrease of 2.4% year-on-year. In contrast, soybean inventories increased to 1.91 billion bushels, while wheat stocks rose to 1.24 billion bushels, both surpassing market expectations. Additionally, data from the Indian Sugar & Bio-energy Manufacturers Association highlighted that sugar production in India for the 2024/25 season reached 24.8 million tonnes as of March 31, with 90 mills actively crushing cane.