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Oil markets are waiting to see if Trump’s Russian oil tariff threats is a bluff

The oil markets shrugged Monday off the threat of U.S. president Donald Trump to impose tariffs on Russian oil buyers as the shock factor of the White House's barrage of threats begins to wear out with jaded traders.

Analysts and traders have questioned the seriousness of Trump's proposal.

Warren Patterson, ING's director of commodities strategy, said that the U.S. government's announcements on tariffs and other sanctions have a tired feel.

He said that the market would not overreact until he could provide more concrete information.

The price of oil fell on Monday. Brent crude futures, the most active, were down 0.2% to $72.59 per barrel at 0028 GMT. U.S. West Texas intermediate crude was also lower by 0.3% to $69.18 per barrel.

China and India are the two largest buyers of Russian crude oil. Their consent is crucial for any secondary sanctions package to seriously harm exports.

Sinopec, Zhenhua Oil, and two other Chinese oil companies have stopped buying Russian oil due to recent U.S. sanctions against Moscow.

On Monday morning, however, several Chinese traders appeared unfazed. Three people who spoke to all said that Trump's constant brinksmanship made them discount what he said.

Unidentified trader said: "We are all numb, the oil prices don't respond." It's not worth listening to Trump any more.

A second said: "It is hard to know what impact it would have as Trump always lies, and his words are no longer credible."

Analysts said that if the tariffs were to become a serious threat to the markets, they would focus on how strict the policy was and whether the Organization of Petroleum Exporting Countries (OPEC) would increase production to compensate for any decrease in Russian exports.

Patterson said that the secondary sanctions on Venezuelan oil imposed last week can be used as a template for markets to evaluate the impact of similar policies against Russia.

Chinese buyers had already stopped their purchases before the sanctions took effect on Wednesday. Analysts and traders expect that some sales will resume as buyers come up with workarounds, unless Beijing bans all purchases.

(source: Reuters)