Oil prices continued to face downward pressure as concerns over escalating trade tensions, particularly between the U.S. and China, weighed on the market. Brent crude traded around $79 per barrel after a series of declines since Thursday, while West Texas Intermediate (WTI) crude remained below $76. President Donald Trump’s recent threats to impose tariffs on China and other nations, including Canada and Mexico, have fueled fears of a broader trade conflict, which could disrupt oil markets further.
Trump’s comments on a potential 10% tariff on China, aimed at countering the flow of fentanyl from the country, added to the uncertainty surrounding global trade. Meanwhile, Canada, anticipating potential U.S. tariffs, has increased its oil exports to the U.S. in an attempt to avoid future levies.
On his first day in office, Trump signed a series of executive orders that included significant changes to U.S. energy policy and threats of tariffs as high as 25% on imports from Canada and Mexico, two of the largest suppliers of crude to U.S. refineries. With Canada already ramping up exports in response, energy analysts at Rystad Energy noted that the country’s suppliers are “pushing as much volume out of the market as possible” before the tariffs take effect, which could begin as early as February 1.
Goldman Sachs warned last year that such tariffs could lead to higher gasoline prices for U.S. consumers, with the potential for broader economic repercussions. Despite these concerns, crude prices have remained higher this year, supported by U.S. sanctions on Russia, which have disrupted global oil markets and tanker routes.
However, the oil market is now shifting focus. According to Warren Patterson, head of commodities strategy at ING Groep in Singapore, “The market’s attention is slowly turning away from the risks associated with Russian sanctions to the more immediate threat of escalating trade tensions.” He also pointed out that the tariff threats are likely to bolster the U.S. dollar, adding another layer of complexity to the global oil market.
As oil prices continue to feel the impact of political and trade uncertainties, market participants are left to navigate the evolving landscape, where both geopolitical risks and trade wars are beginning to play a more significant role in price movements.
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