Oil Prices Decline Amid Trump’s Tariff Plans and Boost in U.S. Oil Production.
According to a Reuters report, Brent crude futures dropped by 65 cents, or 0.81%, to $79.50 per barrel as of 0909 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude fell by $1.15, or 1.48%, to $76.73. U.S. markets were closed on Monday due to a public holiday, leaving Tuesday as the first trading day of the week.
Market strategist Yeap Jun Rong from IG noted, “The initial sense of relief over the delay in trade measures was overshadowed by reports of potential 25% tariffs on Mexico and Canada starting in February, which dampened risk sentiment.”
Trump, who avoided implementing immediate trade measures following his inauguration, directed federal agencies to investigate unfair trade practices. However, he hinted at imposing a 25% tariff on imports from Mexico and Canada starting February 1, rather than on his first day in office as originally pledged.
The delay in tariffs initially put downward pressure on oil prices, but analysts suggest that duties on Canadian crude imports could eventually push prices higher.
Adding to the pressure, a stronger U.S. dollar made oil more expensive for buyers using other currencies. “The current weakness in oil is most likely tied to Trump’s comments and the stronger dollar,” explained Tamas Varga, an analyst at PVM. The dollar rebounded after Trump’s statements regarding tariffs on Mexico and Canada, further weighing on oil prices.
In addition to trade measures, Trump outlined an ambitious plan to expedite permits for oil, gas, and power projects, aiming to maximize U.S. energy production, which is already at record highs.
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The president also suggested that the U.S. would “probably” stop purchasing oil from Venezuela, a significant development as the U.S. is the second-largest buyer of Venezuelan oil after China.
Trump further pledged to refill the nation’s strategic reserves, a move that could increase demand for U.S. crude oil, potentially boosting prices in the long term.
Despite the current market dip, Trump’s energy policies could have significant implications for both domestic production and global oil markets in the coming months.
