Oil prices declined on Tuesday, retreating from the previous session’s surge, after U.S. President Donald Trump announced a one-month delay on newly imposed tariffs on imports from Canada and Mexico. This decision alleviated immediate concerns over potential supply disruptions from two of the U.S.’ primary oil suppliers. At 20:21 ET (01:21 GMT), Brent Oil Futures fell 0.7 percent to $75.47 a barrel, and crude oil WTI futures expiring in March dropped 1 percent to $71.70 a barrel.
Oil reverses track as Trump delays Canada, Mexico tariffs
Oil prices had surged at the start of the week after President Trump announced a 25 percent tariff on imports from Canada and Mexico, alongside a 10 percent levy on energy products from Canada and a 10 percent tariff on Chinese goods, effective February 4. However, following discussions with Canadian and Mexican counterparts, Trump agreed to postpone the tariffs on Mexico and Canada by 30 days. Attention remains on the implementation of tariffs on Chinese imports, which are still scheduled to take effect within hours. The evolving geopolitical landscape and its implications for global trade and oil supply will continue to influence price dynamics in the near term.
Read more: Oil prices rise 0.6 percent to $76.13 amid potential disruptions from Trump’s tariffs
U.S. imports and implications for refiners
The U.S. imports approximately 4 million barrels of Canadian oil and nearly 500,000 barrels of Mexican oil daily. The expected tariffs are anticipated to increase costs for U.S. refiners, especially those in the Midwest and Gulf Coast regions, potentially leading to higher fuel prices and possible production cuts.
OPEC+ still plans to raise production from April
Despite the tariff announcements, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have maintained their current oil production plans, resisting calls from Trump to lower prices. This decision underscores the group’s commitment to a gradual phase-out of production cuts, set to begin on April 1, contingent on low inventories and rising global demand. The OPEC+ cartel has been cutting output by 5.85 million barrels per day, equal to about 5.7 percent of global supply, as agreed in a series of steps since 2022. In December, OPEC+ extended its latest layer of cuts through the first quarter of 2025, pushing back a plan to begin raising output to April. The extension was the latest of several delays due to weak demand and rising supply outside the group.
