New York, U.S. – Oil prices rose on Friday as markets reacted to the potential imposition of U.S. tariffs on crude exports from Mexico and Canada, the two largest suppliers of oil to the United States. The tariffs, threatened by former President Donald Trump, could take effect as early as this weekend, heightening concerns over global economic stability.
Brent and WTI See Gains Despite Weekly Declines
By 7:30 a.m. Saudi time, Brent crude March futures—set to expire on Friday—rose 61 cents to $77.48 per barrel, while the more actively traded April contract climbed 48 cents to $76.37 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained 65 cents, trading at $73.38 per barrel.
Despite Friday’s gains, both benchmarks are set to end the week lower, with Brent down 1.3 percent and WTI declining 1.69 percent. However, January has been a positive month, with Brent up 3.8 percent, marking its best performance since June 2023, and WTI gaining 2.3 percent.
Market Reaction to U.S. Tariff Threats
The uncertainty surrounding Trump’s tariff threats has weighed on global markets. Phillip Nova senior market analyst Priyanka Sachdeva said that crude oil prices dipped earlier in the week due to fears of economic slowdown if tariffs are imposed.
According to ANZ Bank analyst Daniel Hynes, investors are closely monitoring the situation, particularly in light of Trump’s recent executive orders and policy shifts.
Trump has warned of a 25 percent tariff on Mexican and Canadian exports if they do not curb fentanyl shipments across U.S. borders. While it is unclear if crude oil will be included in the sanctions, the uncertainty has fueled volatility in energy markets.
Canada and Mexico: Key U.S. Oil Suppliers
According to the U.S. Energy Information Administration (EIA), Canada exported 3.9 million barrels per day (bpd) of crude to the U.S. in 2023, accounting for the majority of 6.5 million bpd in total U.S. oil imports. Mexico exported 733,000 bpd, making both nations key suppliers.
Trump stated on Thursday that a decision on whether to exempt Canadian and Mexican crude from tariffs would be made soon.
Geopolitical and Supply Risks Keep Prices Elevated
Hynes noted that broader geopolitical risks tied to Russia, Venezuela, and Iran are also driving oil prices higher. New U.S. sanctions on Russian oil exports have already removed over one million barrels per day from global supply.
“Sanctions on Russia, halting Venezuelan oil purchases, and increased pressure on Iran will continue to drive up oil prices,” Hynes explained.
Additionally, the U.S. government’s efforts to refill its Strategic Petroleum Reserve (SPR) could further increase demand and keep prices high, he added.
Upcoming OPEC+ Meeting and Federal Reserve Decision
Markets are also closely watching the upcoming OPEC+ meeting on February 3, where member nations are expected to discuss production policies in response to U.S. sanctions on Russian oil. Kazakhstan’s energy minister confirmed that the group will also address Trump’s push to increase U.S. oil production.
Meanwhile, the Federal Reserve’s decision to keep interest rates unchanged signals a cautious economic outlook amid ongoing inflation concerns in the U.S.
“With Trump’s tariff threats, the path to disinflation is likely to become even more turbulent,” Sachdeva warned, highlighting the potential economic disruptions ahead.
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