Oil Prices Surge on US Tariffs
Oil prices climbed sharply on Monday after President Donald Trump imposed tariffs on various imports, including crude from Canada and Mexico.
US Oil Prices Jump
West Texas Intermediate (WTI), the US benchmark, surged by as much as 3.7% before retracing some gains to trade near $74 per barrel.
Tariffs Threaten Higher Consumer Costs
The tariffs, which took effect on Tuesday, include a 25% levy on Canadian and Mexican imports and a 10% tariff on Chinese goods. The increased feedstock costs are expected to translate to higher prices at the pump, with gasoline futures soaring by as much as 6.2% in New York.
Negotiations Ongoing
President Trump indicated he would speak with Canadian Prime Minister Justin Trudeau on Monday, potentially opening the door for a last-minute deal. However, the European Union has vowed to retaliate against US tariffs, raising concerns about trade disruptions.
Crude Prices Buoyed
Despite a strengthening US dollar, oil prices advanced due to concerns about potential disruptions to US oil supply. The discount of WTI to Brent narrowed to $3.31 per barrel, reflecting increased demand for US crude.
OPEC+ Meeting
The OPEC+ producer cartel is expected to maintain its current production policy when it meets on Monday. The release of prisoners in Venezuela could further impact supply from the OPEC+ member.
Market Volatility
Traded volumes for WTI were elevated in Asia on Monday, indicating increased market volatility. The uncertainty surrounding the trade tensions is likely to continue exerting pressure on oil prices.