How will Trump’s duties affect oil prices?

Luc Williams

Increase in oil prices after Trump’s duties introduced

Decision of President Donald Trump about Applying high duties on imports from Canada, Mexico and China caused an initial increase in oil prices. Increases for American consumers who have to take into account more expensive fuels may become particularly noticeable. Market analysts, however, predict that this effect will be temporary.

The scale of increases and their causes

Under the influence of new regulations, the American oil West Texas Intermediate increased by 1.75%, reaching the level of 73.8 USD for a barrel. The Brent variety also increased by 0.71%to USD 76.21 per barrel. In addition, timely contracts for RBOB gasoline gained 2.81%, reaching a price of USD 2.11 per gallon. These types of increases mainly result from duties that affect the costs of importing energy raw materials.

How did the duties affect oil markets?

Experts emphasize that The price increase is only temporary. According to Andy Lipow, the president of Lipow Oil Associates, a chain of duties and possible retorts from Canada, Mexico or China can lead to a global recession, which will result in oil prices.

The key factor is that the supply is not decreasing on the market – only its redistribution occurs. Canada and Mexico can direct their deliveries to Europe and Asia, while American refineers will look for alternatives in the Middle East.

Canada most exposed to the effects of duties

Canada and Mexico have limited refinery capabilities and alternative export directions, which means that Naft producers in these countries can face significant losses. Goldman Sachs indicates that Canadian pus can be sold with a discount from 3 to 4 USD on Barryłka due to the limited number of recipients.

Oil price forecasts

Experts predict that In the perspective of several months, oil prices can drop significantly. The introduction of wide duties may negatively affect global GDP and the demand for energy raw materials. In addition, the organization of countries exporting oil (OPEC+) is under Trump’s pressure, which demands a decrease in raw material prices by abandoning production cuts.

Currently, OPEC+ limits oil supply by 2.2 million barrels a day, which was aimed at stabilizing prices. However, the decision to extend these restrictions by March 2025 may change if the pressure from the US is growing.

About LUC WILLIAMS

Luc's expertise lies in assisting students from a myriad of disciplines to refine and enhance their thesis work with clarity and impact. His methodical approach and the knack for simplifying complex information make him an invaluable ally for any thesis writer.