Oil Steady as Investors Digest New U.S. Steel, Aluminium Tariffs

Oil prices remained relatively stable on Monday, as investors digested the latest round of U.S. tariffs on steel and aluminium imports. The new tariffs, announced by President Trump, are expected to have both short-term and long-term impacts on global energy demand and oil prices. Here's a closer look at the potential implications and how investors are reacting.



Short-term impacts

In the short term, the tariffs are expected to increase production costs for energy-intensive industries, such as oil refining and petrochemicals. This could lead to higher input costs for U.S. refiners, potentially reducing refinery runs and capacity utilization. Additionally, the tariffs could disrupt established trade flows, forcing companies to find alternative suppliers or adjust their operations. For instance, Canadian energy exports may seek new markets, such as Asia, to mitigate the impact of U.S. tariffs.

Long-term impacts

In the long term, the tariffs could encourage companies to relocate or build new facilities in countries with lower tariff barriers, potentially shifting the global supply chain for energy-intensive industries. This could lead to job losses and economic disruption in the U.S., as well as opportunities for other countries. Furthermore, the tariffs could exacerbate geopolitical tensions and lead to retaliatory measures from affected countries, potentially resulting in a global trade war. This could have significant impacts on global energy demand and oil prices, as trade wars can slow down economic growth and reduce energy demand.

Investor reaction

Despite the potential impacts of the tariffs, oil prices remained relatively stable on Monday, with Brent crude futures climbing 51 cents, or 0.7%, to $75.17 a barrel, and U.S. West Texas Intermediate crude at $71.45 a barrel, up 45 cents, or 0.6%. Investors appeared to be shrugging off the steel and aluminium tariff threat for now, as they have come to realize that tariff headlines are likely to continue in the weeks and months ahead. There is an equal chance that these tariffs could be walked back or even increased at some point in the near future.



In conclusion, the new U.S. steel and aluminium tariffs are expected to have both short-term and long-term impacts on global energy demand and oil prices. In the short term, increased production costs, reduced energy exports, and market uncertainty could lead to a decrease in global energy demand. In the long term, reshoring of manufacturing, increased energy efficiency, and geopolitical tensions could have varying impacts on global energy demand and oil prices. Despite these potential impacts, oil prices remained relatively stable on Monday, as investors digested the latest round of tariffs.