Oil prices witnessed a decline during a turbulent session on Tuesday, following President Donald Trump’s declaration of a national emergency on his inaugural day in office, aimed at boosting U.S. energy production.
Despite the drop in crude prices, losses were curbed by a weakening dollar. Additionally, President Trump indicated potential plans for increased sanctions against Venezuela, which could further tighten oil markets.
Attention also remained on the recent U.S. sanctions affecting Russian crude, while traders adjusted their expectations, incorporating a smaller risk premium into crude prices after a ceasefire agreement was reached between Israel and Hamas.
As of 20:07 ET (01:07 GMT), Brent oil futures set to expire in March had decreased by 0.1 percent, settling at $80.06 per barrel, whereas West Texas Intermediate crude futures saw a 0.9 percent decline, reaching $76.69 per barrel.
Read more: Oil prices up 0.2 percent to $80.91 amid supply concerns, Trump’s inauguration caution
Trump’s vision to enhance U.S. energy production
President Trump, who assumed office on Monday, stated during a White House briefing his intention to declare a national energy emergency and utilize “all necessary resources” to expand energy infrastructure.
He expressed his plans to reverse former President Joe Biden’s climate change initiatives, lifting restrictions on energy production and usage, while facilitating increased mining and processing of non-fuel minerals.
Furthermore, Trump announced the termination of land leasing agreements for wind farms and confirmed that the U.S. would withdraw from the Paris Climate Accord. These energy strategies are designed to alleviate living costs for Americans.
While his remarks were limited in detail, Trump’s statements intensified speculation regarding a potential increase in U.S. oil production over the coming months, following an average of approximately 13 million barrels per day in 2024. This trend is anticipated to mitigate some supply constraints resulting from U.S. sanctions on Russia and ongoing production cuts by the Organization of Petroleum Exporting Countries (OPEC).
In separate remarks, Trump exhibited a tough stance toward Venezuela, indicating that the U.S. might cease oil imports from the nation. It is anticipated that he may implement stricter sanctions, which could tighten crude markets further.
Dollar weakness softens oil losses
Despite the downward trend, further declines in crude oil prices were moderated by a weaker dollar, as Trump refrained from imposing trade tariffs against China on his first day in office, a move that many had anticipated.
Although he hinted at an “America-first” trade policy, the market reacted positively, betting that a gentler approach on tariffs could contribute to a reduction in inflation and interest rates over the long haul.
A more lenient attitude towards China may also ease pressure on the world’s largest oil importer, which could enhance its demand for crude.
