Crude oil futures rallied to their highest levels in more than a month after President Trump threatened to impose secondary tariffs on buyers of Russian oil if the Kremlin prevents a deal to end the war in Ukraine, although many traders suspect the threat is a bluff.

Trump's threat to slam buyers with a 25%-50% tariff would be significant for oil markets if it turned into an order, but Trump's frequent use of brinkmanship meant traders were said to mostly discount the comments.

China and India are the biggest buyers of Russian crude, and their reaction would be crucial to any secondary sanctions package that would seriously hurt the Putin regime.

Trump's remarks likely are "more of a threat tactic than anything," Dennis Kissler of BOK Financial said. "It's not really a wildly bullish aspect because it's not going to stop all the oil, but it's causing some short-covering in the market, " adding that WTI's move above the 200-day moving average added to the buying.

Prices also were supported by Trump’s threat to bomb Iran if it fails to come to an agreement on its nuclear program, as well as concerns over tightening supplies from U.S. pressure on Iranian and Venezuelan crude exports.

Still, market participants caution the broader outlook remains bearish as OPEC+ prepares to raise oil production while an escalating global trade war risks slowing economic growth as well as demand for crude oil, and the market also is watching for U.S. tariff plans expected to be unveiled Wednesday, including impending duties on Canadian and Mexican oil.

"The macroeconomic implications of the tariffs have been pushed to the back burner for now with the help of possible sanctions on Iranian and Venezuelan oil. Nonetheless, we still see tariff-related slowing in U.S. oil demand as this year progresses," Ritterbusch analysts said.

Front-month Nymex crude (CL1:COM) for May delivery ended +3% to $71.48/bbl, its highest settlement value since February 20, and front-month May Brent crude (CO1:COM) finished +1.5% to $74.74/bbl, its best closing value since February 24; Nymex and Brent jumped 2.5% and 2.1% this month, respectively, but results were little changed YTD, with Nymex down 0.3% and Brent up 0.1%.

U.S. natural gas futures (NG1:COM) gained as cooler near-term weather forecasts help offset pressure from two straight weekly inventory builds, with the May front-month contract settling +1.3% at $4.119/MMBtu; Nymex gained 7.5% for March and 13.4% YTD.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

In the U.S., crude oil production fell by 305K bbl/day to 13.15M bbl/day in January, the lowest level since February 2024 and the biggest monthly decline in U.S. output since January 2024, according to the latest data from the Energy Information Administration.

The EIA also lowered its estimate of record U.S. oil production in December by ~40K bbl/day to 13.45M bbl/day.

Oil production in Texas fell by 105K bbl/day to 5.58M bbl/day, the lowest level since March 2024 and the state's largest monthly decline since January 2024.