Oil Prices Rise as Trump Tariff Threats Shake Global Markets
Oil prices rose as U.S. President Donald Trump reiterated plans to impose tariffs on Canada and Mexico starting Saturday, though crude flows may be exempt from the levies.
Brent rose above $77 a barrel, while West Texas Intermediate neared $73. Trump has said he will follow through on his threat to impose 25% tariffs on imports from the two countries, and has also said he will target China. While the president hinted at an imminent decision on whether crude would be included, no specifics have emerged.
Crude prices are still set to rise modestly in January, though gains from U.S. sanctions on Russia and cold weather have been largely offset by Trump’s planned tariffs and his call for OPEC to lower crude prices by raising production. Traders expect the group to stick to its current supply policy of gradually adding supplies only starting in April at a review meeting next week.
Canada ships about 4 million barrels a day to the U.S., and the two countries’ markets are closely integrated, with refiners in the Midwest most vulnerable to disruptions. Mexico ships about 500,000 barrels a day to its northern neighbor. Valero Energy Corp., the third-largest U.S. fuel maker by market value, expects processors to cut output if tariffs hit oil imports.
“The inclusion of Canadian oil in the 25% tariffs on Canada and Mexico would likely initially raise gasoline prices in the U.S. Midwest,” Goldman Sachs Group Inc. analysts including Daan Struyven said in a note. Ultimately, such a move would “weigh on crude prices globally,” they added.
Trump had said earlier that he would make a decision on whether to exempt crude from the levies as early as Thursday night in the U.S., basing his decision on oil prices. “We don’t need the product they have,” he said. “We have all the oil you need.”
Source: Bloomberg
