West Texas Intermediate climbed to $73.70 this week following remarks from former President Donald Trump in the Oval Office, where he confirmed his intention to impose tariffs on a broad spectrum of imported goods over the coming months, specifically mentioning oil and gas as part of the plan.
However, Trump also indicated a potential adjustment for Canadian oil imports, stating that he might lower the tariff rate to 10%, a significant reduction from the initially proposed 25% levy on goods from Canada.These latest comments have introduced further uncertainty into an already volatile oil market, as traders and industry analysts react to shifting signals regarding both the timing and extent of the planned tariffs.
Prices fluctuated throughout the day due to conflicting reports about how these measures would be implemented and their impact on key U.S. trading partners, particularly Canada and Mexico, which are among the largest suppliers of crude to the United States.Including crude oil in the scope of the tariffs could have far-reaching consequences across the global energy sector.
Canada exports approximately 4 million barrels of oil per day to the U.S., and the two countries’ energy markets are deeply intertwined. Refiners in the Midwest, which rely heavily on Canadian crude, would be especially vulnerable to any disruptions in supply.Valero Energy Corp., the third-largest fuel producer in the United States based on market value, has expressed concerns that refining companies may be forced to scale back production if oil imports become subject to tariffs. Canadian crude oil prices have already experienced significant fluctuations in response to discussions about the potential levies, while gasoline and diesel premiums have risen in recent days as market participants assess the possible repercussions.According to analysts from Goldman Sachs Group Inc., including Daan Struyven, imposing a 25% tariff on Canadian and Mexican oil imports would likely lead to an immediate increase in gasoline prices in the U.S. Midwest.
Over time, the broader impact could extend to global crude markets, as higher fuel costs may suppress demand, ultimately weighing down oil prices. The effect would be particularly pronounced in Canada, where oil producers already face limited options for exporting their supply to alternative markets.
