Oil Prices Fluctuate Amid Trade Tariffs and Russia Sanctions
Oil prices oscillated as President Donald Trump threatened tariffs against China and the European Union. Traders continue to navigate the ramifications of unprecedented U.S. sanctions on Russia.
West Texas Intermediate (WTI) crude held steady around $76 per barrel, extending a decline sparked by the potential impact of a renewed global trade conflict on consumption and economic growth. Trump has expanded his tariff threats to include a 10% levy on two of the world's largest energy markets, China and the EU.
These actions follow Trump's proposals for tariffs of up to 25% on goods imported from Canada and Mexico, key oil suppliers to the U.S. The potential tariffs on Canadian oil have already resulted in a surge of exports to the U.S. to avoid potential charges. However, Goldman Sachs warns that such tariffs could lead to higher gasoline prices for American consumers.
Oil traders are also grappling with the impact of the most comprehensive sanctions yet imposed on Russian oil. Indian Oil Corp. anticipates a supply disruption of up to 2 million barrels per day due to these measures. The value of Dubai crude relative to other benchmarks has increased as traders seek alternative sources of supply.
Despite the recent volatility, crude prices remain elevated year-over-year, supported by Russia sanctions and severe weather in the northern hemisphere. A historic winter storm recently disrupted energy markets in regions stretching from Texas to North Carolina.
"The oil market currently appears more sensitive to trade restriction threats," said John Evans, an analyst at PVM. "Russia and weather considerations are still relevant, but they are currently overshadowed by tariff uncertainty."
The recent decline in oil prices has been tempered by WTI's 200-day moving average, which is acting as a support level.