Why oil markets are calm in Trump's global storm

• And their movement signals what traders think about how policy upheaval will — or won't — change supply and demand.

The big picture: Oil has traded in a narrow range since President Trump's election, with Brent mostly chilling in the $70-$80-ish band, and prices were also pretty stable throughout 2024.

• That's especially true compared to huge swings when COVID crushed demand in 2020 and then Russia's 2022 invasion of Ukraine sent prices skyward (check out the chart above).

State of play: There's no shortage of market-moving news lately, including tariffs, but lots of it rows in opposing directions.

• Trump's hopes to boost supply with a "drill baby drill" blitz, though macroeconomic forces influence oil companies more than regulatory changes. A near-term surge doesn't look likely.
• Trump is also pushing for more Saudi barrels but plans to ratchet up Iran sanctions enforcement, which could take lots of supply off the market.

What they're saying: "The market is tuning out a lot of policy pronouncements from Washington, because there are conflicting signals," oil expert Ben Cahill of UT-Austin tells me via email.

• "Will Trump offer sanctions relief for Moscow? Will he tighten the screws on Iran and restrict supply? Hard to tell," said Cahill, who's with the school's Center for Energy and Environmental Systems Analysis.
• The current price band could also have a self-sustaining energy. Cahill notes that macro concerns are keeping prices below $80, and he calls $75-$80 the "Goldilocks" zone.
• That means "high enough to keep producers humming, but not so high that prices harm economies and depress growth."

Friction point: Tariffs against trading partners create headwinds that can hurt demand.

• But then there's the added wrinkle of whether Trump will actually follow through on a given threat — including against Canada, a huge oil supplier to U.S. refineries.

• "Tariffs are legitimately a mixed bag for oil prices," Clayton Seigle of the Center for Strategic and International Studies tells me.
• "The supply side is bullish because refiners' costs will increase, but the demand side is bearish as trade wars threaten to pull down GDP and oil demand along with it," Seigle, a senior fellow in energy security, said via email.

What we're watching: Trump's efforts to negotiate an end to Russia's war on Ukraine, with sanctions relief reportedly on the table, are yet another variable.

The intrigue: The calm isn't limited to oil. Lots of asset classes have been fairly stable.

• The only ones really moving this year are hedges against tariffs and inflation — think gold prices breaking records like they're going out of style.

The bottom line: "The noise-to-signal ratio is overwhelming oil traders," Seigle said.

• "Headlines with conflicting implications for supply-demand balances are coming too fast for traders and portfolio managers to effectively process."