Oil Prices: Trump’s Tariff Threats and Global Tensions Shake the Market. What’s Next?
President Donald Trump announced that 25% tariffs on imports from Canada and Mexico will take effect on Saturday, February 1, while he is still considering whether to include oil from these countries in his broader tax plan.
The former president stated that his decision will depend on whether the two trading partners maintain fair oil prices. However, the risk of tariffs on Canadian and Mexican crude could contradict Trump’s repeated pledge to lower overall inflation by reducing energy costs.
These tariffs could be passed on to consumers in the form of higher gasoline prices, a key issue in Trump’s Republican presidential campaign, where he promised to cut fuel costs in half within a year.
Meanwhile, oil prices rose in after-hours trading on Friday, January 31, following Trump’s remarks that his administration might lower proposed tariffs on Canadian oil from 25% to 10%, with implementation delayed to February 18, later than initially expected.
As uncertainty surrounding U.S. trade and energy policy grows, major Wall Street banks have raised their oil price forecasts for the year. However, concerns over demand trends and potential oversupply are keeping projections below $80 per barrel. So, what’s next for crude oil prices?
Oil Prices, What to Expect? Trump’s Tariffs Bring Volatility
On February 1, Trump is expected to impose 25% tariffs on Canadian and Mexican exports to the U.S., without specifying whether oil and gas will be exempt.
“It’s the uncertainty that’s starting to push prices up,” said John Kilduff, a partner at Again Capital in New York. Canada and Mexico are the two largest exporters of crude oil to the U.S. In particular, Canadian crude is a key input for many refineries in the U.S. Midwest, and a reduced flow will likely push up fuel prices, analysts warn.
According to Energy Aspects strategist Livia Gallarati, the tariffs could result in major production cuts for U.S. refineries. “Our base case is that if tariffs are announced, there will be a grace period for negotiations, and ultimately, oil will likely be excluded from any tariffs,” Gallarati noted.
For now, however, analysts emphasize that many U.S. oil refineries—especially in the Midwest—depend on imported crude, as their facilities are configured to process heavier crude, such as that from Mexico and Canada. If supply is restricted due to tariffs, these refineries can’t easily replace it, which could lead to an immediate price increase in the U.S.
It’s Not Just Trump: Watch These Factors for Crude
A survey involving institutions including Goldman Sachs, JPMorgan, and Morgan Stanley indicates that Brent crude is expected to average $73.01 per barrel, while West Texas Intermediate (WTI) is estimated at $68.96 per barrel. These figures are slightly higher than the December forecast.
ANZ commodity strategists Daniel Hynes and Soni Kumari noted that many of Trump’s policies could ultimately tighten the oil market.
In short, investors are increasingly concerned about the U.S. tariff plan. A tax hike on crude imports could have significant impacts, potentially increasing gasoline prices in the U.S. Midwest, Canada’s largest oil consumer.
But watch out for other factors. Goldman Sachs analysts predict that Brent crude prices could temporarily rise to $93 per barrel if sanctions succeed in curbing Iranian and Russian oil exports by a combined 1 million barrels per day (bpd).
In a note shared by ZeroHedge on X, the bank outlined a scenario in which Iran faces persistent supply disruptions, while Russia suffers temporary setbacks, tightening global crude markets. With geopolitical tensions already putting pressure on supply chains, traders are watching for policy shifts that could exacerbate the squeeze.
“We estimate that Brent could temporarily rise to $93/bbl in a scenario where sanctioned supply declines by 1 mb/d persistently for Iran and temporarily for Russia,” they speculated at Goldman Sachs.
Original article published on Money.it Italy 2025-02-01 12:39:00. Original title: Effetto Trump (e non solo) sul prezzo del petrolio. Ecco cosa può accadere
