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Oil prices climbed on Monday as U.S. President Donald Trump imposed tariffs on Canada, Mexico, and China, raising fears of potential supply disruptions. However, concerns over a broader trade war limiting global economic growth capped gains.
Key Oil Price Moves:
- Brent crude futures rose 1.03% to $76.45 per barrel (0933 GMT), after hitting a high of $77.34.
- West Texas Intermediate (WTI) crude jumped 1.88% to $73.89 per barrel, touching $75.18, its highest since Jan. 24.
- U.S. gasoline futures spiked 2.5% to $2.11 per gallon, reaching a high of $2.162, as supply fears intensified.
What’s Driving Oil Prices?
- Trump Tariffs on Energy Imports
- 25% tariffs on most Mexican and Canadian goods.
- 10% tariff on energy imports from Canada and Chinese goods (effective Feb. 4).
- Impact: Raises costs for heavier crude grades needed by U.S. refiners.
- Potential Impact on U.S. Gasoline Prices
- Canada and Mexico supply 25% of U.S. crude imports.
- Tariffs could disrupt refining operations, raising fuel prices.
- Analyst View: Rystad Energy’s Mukesh Sahdev warns of higher U.S. pump prices.
- OPEC+ Meeting in Focus
- Investors await Monday’s OPEC+ meeting, where output policy will be discussed.
- If tariffs persist, production losses in Canada & Mexico could support OPEC+ relaxing output curbs.
- Goldman Sachs Outlook
- Analysts see limited near-term impact on global oil prices.
- Trade war risks may weigh on longer-term demand.
Looking Ahead:
- Short-Term: Oil prices remain supported by supply concerns.
- Long-Term: Trade war fears & economic slowdown risks could cap gains.
- Key Event: OPEC+ decision on output levels could influence market direction.
