Oil Jumps as Trump Imposes Tariffs on America’s Biggest Supplier
Oil prices jumped as President Donald Trump imposed steep tariffs on a range of imports including Canadian and Mexican crude, threatening higher costs for consumers.
West Texas Intermediate, the U.S. benchmark, rose as much as 3.7% to $75.18 a barrel, while Brent crude gained less, nearing $76. Trump carried out his threat to impose blanket levies of 25% on Canada and Mexico and 10% on Chinese goods starting Tuesday, prompting promises of retaliation and leaving little time for last-minute negotiations.
Canadian energy faces a 10% reduction in the levies, which cover about 4 million barrels of crude a day. The U.S. gets most of its oil from its northern neighbor — as well as about 500,000 barrels from Mexico. Rising raw material costs are likely to send prices soaring at the pump, with the most-active gasoline futures jumping as much as 5% in New York.
Crude has fallen since Trump’s inauguration, with the new administration’s policies threatening to disrupt global trade and growth, but it still posted modest gains last month after benefiting from a cold winter and U.S. sanctions on Russian oil. Trump has also hinted at broader tariffs in the coming months, including on the European Union.
“Tariffs on the largest U.S. crude supplier are giving a boost to crude prices and in particular refined product prices,” said Warren Patterson, head of commodity strategy for ING Groep NV. “While this may be supportive in the very short term, we may not have to wait too long for a move away from risk as this raises concerns about global growth.” The potential disruption to U.S. oil supplies has seen WTI’s discount to global benchmark Brent narrow to about $3 a barrel from a low of almost $4 last month. Volumes traded were also well above average levels in the Asian session, with about 200,000 lots of WTI traded across the curve in the first hour, or nearly a fifth of Friday’s total.
Source: Bloomberg
