Oil Drops as Signs of Tariff Ease Fuel Uncertainty
Oil was pushed lower after U.S. Commerce Secretary Howard Lutnick said the Trump administration could lift some tariffs on Mexico and Canada, adding to uncertainty in global markets.
West Texas Intermediate crude fell below $68 a barrel after falling 3% over the past three sessions. Brent closed near $71 on Tuesday. Lutnick did not explicitly say what action President Donald Trump was considering, but dismissed the idea that the levies would be lifted entirely. He made his comments on Fox.
Crude prices have been falling since mid-January as Trump’s trade policies raise the prospect of a multi-pronged trade war, which could hurt energy demand. Oil options traders are the most pessimistic in five months on concerns about the impact of U.S. tariffs and OPEC+’s plan to revive stalled production.
Trump’s levies could lead to a re-routing of global crude flows, depending on the final arrangement. Mexican oil could be directed to regions such as Asia, Latin American oil that is free of tariffs could be shipped to the U.S. in greater quantities, and U.S. East Coast fuel buyers would need to turn to Europe. Elsewhere, China set its economic growth target at around 5% for 2025, according to a government report seen by Bloomberg, raising expectations that officials will unleash more stimulus as they grapple with the U.S. trade war.
Source: Bloomberg
