Oil Prices Steady Amid Trump Tariff Delay and U.S. Production Plans

Oil prices remained stable in Asian trading on Tuesday as traders evaluated President Donald Trump’s decision to delay the imposition of new tariffs while also focusing on increasing oil and gas production in the United States.

The price of Brent crude futures saw a slight decrease of 1 cent, amounting to 0.01%, putting it at $80.14 per barrel by 0405 GMT.

In comparison, the West Texas Intermediate (WTI) crude for March delivery dropped by 60 cents, or 0.78%, to $76.79 a barrel. It is worth noting that the U.S. market did not settle on Monday due to a public holiday, and the February contract is set to expire on Tuesday.

Market strategist Yeap Jun Rong from IG pointed out that there are numerous factors for traders to consider, heavily influenced by recent headlines synonymous with the Trump administration. He highlighted how initial relief regarding the absence of immediate trade measures was quickly replaced by concerns over potential 25% tariffs on imports from Canada and Mexico starting in February.

While Trump chose not to implement significant trade measures on his first day in office, he directed federal agencies to examine unfair trade practices by other nations. He indicated that the planned tariffs on Canadian and Mexican imports would occur later than previously expected.

This delay of tariff implementation initially contributed to a dip in oil prices, but concerns remain that any tariffs on Canadian crude could push prices higher in the long run. Given that almost all of Canada’s oil exports flow to the U.S. at discounted rates compared to WTI, new sanctions could heighten costs for Canadian oil, hence affecting the broader market according to Commonwealth Bank analyst Vivek Dhar.

Traders are also keenly watching potential tariffs on China, which could further influence oil prices amid existing weak economic conditions in that region. Additionally, a surge in U.S. oil production stemming from Trump’s encouragement of offshore drilling continues to pose a significant factor in supply-demand dynamics, as noted by Yeap.

On the policy side, Trump detailed an ambitious plan aimed at accelerating oil, gas, and power project permit approvals to further enhance U.S. energy production, which is already at record levels. Furthermore, he suggested that the U.S. will likely stop purchasing oil from Venezuela, a country from which the U.S. is the second-largest buyer, following China. Trump also expressed intent to replenish the country’s strategic oil reserves, which may be a bullish sign for oil prices by increasing demand for U.S. crude.

In other developments, the state of North Dakota reported a decline in crude output by approximately 125,000 to 150,000 barrels per day attributed to severe cold weather and associated operational difficulties, according to the state’s pipeline authority.

Oil, Trade, Production