Oil Prices Slide Amid Trade War Concerns
On Tuesday, oil prices declined after President Trump enacted executive orders designed to increase U.S. production. Additionally, he hinted at imposing tariffs on Canada and Mexico, raising fears of a trade war.
West Texas Intermediate (CL=F) fell over 2% to end at $76.89 per barrel, while Brent (BZ=F) also declined by more than 1%, closing at $79.29.
On the first day of his presidency, Trump declared a national energy emergency, facilitating expedited approvals for domestic oil and gas leasing, production, and transportation. He also issued an executive order aimed at unlocking Alaska's resources through streamlined permitting and leasing processes.
Trump's announcement of possible tariffs on Canada and Mexico, effective February 1, fueled concerns regarding a trade war that could impact economic growth and, consequently, oil consumption. Goldman Sachs analysts warned that U.S. trading partners would retaliate if the White House imposed tariffs.
Additionally, Trump withdrew the U.S. from the Paris Climate Agreement and declared his intention to replenish the Strategic Petroleum Reserve, which was depleted during the Biden administration following Russia's invasion of Ukraine in 2022.
Despite the initial surge in oil prices at the start of the year due to Northern Hemisphere cold temperatures and expanded sanctions on Russian energy, WTI and Brent have gained 6% and 5%, respectively, year-to-date.