Oil Surges on Trump Tariffs Targeting Canada and Mexico
Oil prices spiked after President Donald Trump imposed tariffs on imports, including crude oil from Canada and Mexico. West Texas Intermediate (WTI), the U.S. benchmark, jumped 3.7% to $75.18 per barrel, while Brent crude rose to nearly $76.
Following through on his threats, Trump implemented 25% tariffs on goods from Canada and Mexico and 10% on Chinese products starting Tuesday. This triggered retaliation pledges and narrowed the window for last-minute negotiations.
Canada's energy exports face a reduced tariff of 10%, encompassing around 4 million barrels of crude daily. The U.S. imports the majority of its oil from its northern neighbor, along with approximately 500,000 barrels from Mexico.
The escalating feedstock costs are likely to translate into higher gas prices, with the most traded gasoline futures soaring up to 5% in New York.
"Tariffs on the U.S.'s largest crude oil supplier are boosting crude oil and refined product prices," said Warren Patterson, head of commodities strategy at ING Groep NV. "This may provide short-term support, but concerns over global growth could lead to a risk-off move."
The potential disruption to U.S. oil supply has narrowed the discount of WTI to Brent to around $3 per barrel, compared to a low of nearly $4 last month. Trading volumes were also exceptionally high in the Asian session, with significant transactions in WTI contracts.