U.S. Threatens 100% Tariffs on Russia, Oil Prices Drop 50-Day Grace Period Seen as Negotiation Window

In a significant development, the United States President announced a major declaration regarding Russia, which included a threat of imposing 100% tariffs on Russia if a agreement is not reached within 50 days. Additionally, the declaration mentioned secondary tariffs on countries purchasing Russian oil and an agreement with NATO to supply weapons to Ukraine. However, the market's reaction to this declaration was underwhelming, with many viewing the 50-day grace period as sufficient time for negotiations, leading to a drop in oil prices.

The declaration, made during a meeting with the NATO Secretary General, emphasized the administration's dissatisfaction with Russia's actions. The President stated that if no agreement is reached within 50 days, the U.S. would impose severe tariffs on Russia. This announcement was seen as lacking immediate threat, which led to a temporary relief in concerns over Russian oil export sanctions and a subsequent drop in oil prices.

The declaration also included an agreement with NATO to supply weapons to Ukraine. The U.S. will provide various weapons to NATO, which will then coordinate the delivery to Ukraine. The President highlighted that the equipment, including the Patriot missile defense system, would be delivered swiftly, with some European countries also contributing their Patriot systems to Ukraine.

Market analysts noted that the declaration lacked immediate threat, leading to a limited short-term impact on global energy supply. The 50-day grace period was seen as providing ample time for negotiations, which contrasted with earlier expectations of immediate sanctions. This perception contributed to the market's muted response and the subsequent drop in oil prices.

The declaration came after a disappointing phone call with the Russian President, during which the U.S. President hinted at a major announcement regarding Russia. Media reports had speculated about aggressive measures, including long-range missiles capable of reaching deep into Russian territory. However, the actual declaration was seen as more measured, leading to a reversal in the initial market reaction.

The market's response was further influenced by ongoing legislative efforts in the U.S. Congress and the European Union to impose additional sanctions on Russia. Against this backdrop, the U.S. President's declaration was viewed as relatively moderate, contributing to the market's overall reaction.