Oil News: Crude Under Pressure as Tariff Uncertainty Weighs on Demand

Oil Prices Set for Weekly Drop as Trump’s Tariff Threat Weighs

Oil prices dipped on Friday, heading for a weekly decline as traders braced for potential U.S. tariffs on Canada and Mexico. Brent crude was set for a 2.3% weekly loss, while West Texas Intermediate (WTI) eyed a 2.8% drop as uncertainty gripped the market.

President Donald Trump has threatened to impose 25% tariffs on imports from Canada and Mexico as early as Saturday, citing concerns over fentanyl shipments and border security. However, he has yet to clarify whether crude oil will be included, leaving traders in limbo.

At 11:48 GMT, Light Crude Oil Futures are trading $72.45, down $0.28 or -0.38%.

Tariff Uncertainty Sparks Market Caution

Canada and Mexico are the top two crude suppliers to the U.S., with Canada exporting 3.9 million barrels per day (bpd) and Mexico 733,000 bpd in 2023, according to the U.S. Energy Information Administration (EIA). A tariff on crude could disrupt flows, push up U.S. oil prices, and tighten supply.

Trump hinted that his decision would depend on market conditions and trade relations, stating, “We may or may not [include oil].” Analysts suggest that excluding crude could limit price volatility, while an all-encompassing tariff would create bullish pressure on U.S. crude by raising costs on key imports.

OPEC+ Meeting Adds Another Market Risk

Beyond the tariff drama, traders are also awaiting the February 3 OPEC+ meeting, where members will discuss production policy. Kazakhstan’s energy minister confirmed that OPEC+ will review Trump’s push for higher U.S. output and may consider adjusting voluntary production cuts.

Analysts believe OPEC+ could boost supply to ease price concerns, but any action will be measured. A misstep could lead to increased market volatility, especially if the U.S. enforces tariffs on oil imports from its key suppliers.

Market Outlook: Short-Term Weakness, Tariff-Driven Upside Risk

Oil prices are under pressure from a strong U.S. dollar and economic concerns, keeping the short-term outlook bearish. However, if Trump imposes tariffs on Canadian and Mexican crude, the market could shift bullish, with tighter supply supporting prices.

Traders are watching for Trump’s final tariff decision and OPEC+ policy signals. Any move to disrupt North American oil flows or adjust production quotas could trigger sharp price swings in the days ahead.

Technically, all eyes are on the downside target zone formed by the 200-day moving average is $70.86 and the 50-day moving average at $70.63. This is a value zone. Let the market come to you. Buyers could show up on a test of this area.

More Information in our Economic Calendar.