Oil prices experienced a continued decline on Tuesday, following US President Donald Trump’s suspension of military aid to Ukraine. This shift comes amid preparations for the implementation of American tariffs on imports from Canada, Mexico, and China.
As of 01:49 GMT, Brent crude futures decreased by 54 cents, or 0.75%, to $71.08 per barrel. Similarly, US West Texas Intermediate crude fell by 36 cents, or 0.53%, to $68.01.
A White House representative confirmed on Monday the halt of all US military assistance to Ukraine, which followed a tense exchange between President Trump and Ukrainian President Volodymyr Zelensky during a meeting last week.
Market analysts interpret the growing rift between the White House and Ukraine as a potential indication of diminished conflict risk. This scenario may facilitate the easing of sanctions on Russia, potentially allowing for a rebound in oil supplies reaching the market.
Goldman Sachs analysts have indicated that while Russian oil flow restrictions are primarily influenced by OPEC+ production trends, rather than sanctions alone, any adjustments may not lead to a considerable increase in oil streams.
The OPEC+ coalition is moving forward with a planned output increase of 138,000 barrels per day, marking its first production hike since 2022.
On Monday, oil prices fell nearly 2%, reaching their lowest point in 12 weeks, amid concerns that the new US tariffs could negatively impact global economic growth.
The tariffs initiated by Trump are set to take effect at 12:01 AM EST (0501 GMT) on Tuesday, imposing a 10% tariff on Canadian energy imports. Tariffs on Chinese goods will escalate from 10% to 20%. Analysts predict these tariffs will adversely affect economic performance, heightening demand and exerting downward pressure on oil prices.
