CommoditiesData

Oil Prices Surge as Trump Threatens Tariffs on Canada, Mexico

Oil prices experienced an uptick on Friday, influenced by U.S. President Donald Trump’s indication of potential customs duties on Mexico and Canada—two of the largest crude oil exporters to the United States. These duties could be enforced as early as next week.

Brent crude oil futures for March delivery rose by 38 cents to settle at $77.25 per barrel by 0110 GMT. Meanwhile, the more active April contract increased by 34 cents to $76.23 per barrel.

In the U.S., West Texas Intermediate (WTI) crude climbed by 49 cents, reaching $73.22 per barrel.

In terms of weekly performance, Brent is projected to see a decline of 1.6 percent, while U.S. crude is expected to decrease by 2 percent. However, Brent is set for a monthly increase of 3.6 percent for January, marking its best performance since June, and U.S. crude is anticipated to rise by approximately 2 percent, according to market analysts.

Trump’s threats to implement a 25 percent customs duty on crude oil imports from Canada and Mexico stem from concerns over fentanyl shipments crossing the U.S. border. As of now, it remains uncertain whether these customs measures will include crude oil imports. Trump has indicated that a decision regarding the exemption of Canadian and Mexican oil will be made shortly.

Daniel Heinz, an analyst at an Australian financial institution, commented, “Crude oil prices have been volatile as investors consider the ramifications of potential U.S. customs duties coupled with a series of executive actions. The apprehension regarding supply disruptions due to the new administration’s foreign policy is maintaining elevated prices.”

In 2023, the available data indicates that Canada supplied 3.9 million barrels per day of crude oil to the United States, out of a total of 6.5 million barrels per day imported. Mexico contributed 733,000 barrels per day, based on energy information statistics from the U.S. Department of Energy.

Heinz elaborated that heightened geopolitical risk stemming from sanctions on Russia, the halt in Venezuelan oil purchases, and stringent measures on Iran is influencing oil prices. He noted, “The strategic reserve of oil could face increased demand, further impacting crude prices.”

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