Oil Steadies After Weekly Decline as Market Weighs Trump Tariffs

Oil prices steadied on Friday after a weekly decline, as traders assessed the potential impact of U.S. President Donald Trump's proposed tariffs on Canada and Mexico. The market is grappling with the implications of these tariffs on crude oil flows and pricing, as well as their broader economic consequences.



The U.S. benchmark West Texas Intermediate (WTI) crude futures rose 0.2% to $53.77 a barrel, after falling 1.5% on Thursday. Brent crude futures, the international benchmark, also gained 0.2% to $57.35 a barrel. The market is digesting the potential disruptions to crude oil supply chains and pricing dynamics that Trump's tariffs could bring.



The proposed tariffs on Canadian and Mexican crude oil imports could have significant implications for U.S. refiners, particularly those in the Midwest and Gulf Coast regions. The tariffs may increase crude oil costs, disrupt supply chains, and intensify competition for crude among U.S. refiners. This could lead to higher refined product prices, reduced refining activity, or even refinery closures.

Moreover, the tariffs could have broader economic consequences, potentially disrupting global trade and supply chains. This could lead to a risk-off move in markets, as noted by Warren Patterson, head of commodities strategy for ING Groep NV.



The market is also weighing the potential for retaliation from Canada and Mexico, which could further disrupt global trade and harm U.S. energy security and economic growth. The uncertainty surrounding these potential disruptions is contributing to the market's cautious stance.

However, some market participants remain optimistic about the long-term prospects for the oil market. They argue that the recent decline in oil prices is a correction after a strong rally, and that fundamentals remain supportive of higher prices. These participants point to robust global demand growth, tight supply, and geopolitical risks as factors that could drive oil prices higher in the coming months.

In conclusion, the oil market is grappling with the potential implications of Trump's proposed tariffs on Canada and Mexico. The market is uncertain about the disruptions to crude oil supply chains and pricing dynamics that these tariffs could bring, as well as their broader economic consequences. While some market participants remain optimistic about the long-term prospects for the oil market, the uncertainty surrounding these potential disruptions is contributing to the market's cautious stance. As the situation unfolds, traders will continue to monitor the developments and adjust their positions accordingly.