Oil Prices Gain as Trump Tariffs Stoke Supply Worries

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown)
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Oil Prices Gain as Trump Tariffs Stoke Supply Worries

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown)

Oil prices rose on Monday after US President Donald Trump imposed tariffs on Canada, Mexico and China, raising fears of supply disruption, though gains were capped by concern over what could be an economically damaging trade war.

Brent crude futures were up $1.55, or 2%, at $77.22 a barrel by 1402 GMT, having earlier touched a peak of $77.34.

US West Texas Intermediate crude futures were $2.19, or 3%, higher at $74.72 after reaching their highest since Jan. 24 at $75.18.

Trump's sweeping tariffs on goods from Mexico, Canada and China kicked off a trade war that could dent global growth and reignite inflation.

The tariffs, which will take effect on Feb. 4, include a 25% levy on most goods from Mexico and Canada, with a 10% tariff on energy imports from Canada and a 10% tariff on Chinese imports, Reuters reported.

"The relatively soft stance on Canadian energy imports is likely rooted in caution," Barclays analyst Amarpreet Singh said in a note.

"Tariffs on Canadian energy imports would likely be more disruptive for domestic energy markets than those on Mexican imports and might even be counterproductive to one of the president's key objectives - lowering energy costs."

Goldman Sachs analysts expect the tariffs to have limited near-term impact on global oil and gas prices.

Canada and Mexico are the top sources of US crude imports, together accounting for about a quarter of the oil U.S. refiners process into fuels such as gasoline and heating oil, according to the US Department of Energy.

The tariffs will raise costs for the heavier crude grades that US refineries need for optimum production, industry sources said.

Gasoline pump prices in the US are certainly expected to rise with the loss of crude for refineries and the loss of imported products, said Mukesh Sahdev at Rystad Energy.

Trump has already warned that the tariffs could cause "short-term" pain for Americans.

US gasoline futures jumped 2.5% to $2.11 a gallon after touching their highest level since Jan. 16 at $2.162.

"It is clear that the tariffs will have a negative effect on the global economy, with physical markets set to get tighter in the near term, pushing crude prices higher," said Panmure Liberum analyst Ashley Kelty.



Saudi Arabia Unveils Pavilion at International Defense Exhibition and Conference in UAE

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
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Saudi Arabia Unveils Pavilion at International Defense Exhibition and Conference in UAE

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)

The activities of the Saudi pavilion, organized by the General Authority for Military Industries (GAMI), kicked off on Monday at the International Defense Exhibition and Conference "IDEX 2025" in Abu Dhabi. This event is being held under the patronage of Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates.

Governor of GAMI Eng. Ahmad Abdulaziz Al-Ohali participated in the launch, in the presence of Lt.-Gen. Mohammad Bin Abdulrahman bin Hamed Al-Gharibi, Chief of Staff of the Royal Saudi Naval Forces, Sultan bin Abdullah Al-Angari, Saudi ambassador to the UAE, and a number of officials, international investors and decision-makers in the sector.

Al-Ohali emphasized the significance of the Kingdom's participation in IDEX 2025 as a leading global platform for showcasing the latest military technologies.

He underscored the importance of establishing international partnerships that enhance the Kingdom's defense and security capabilities.

The Saudi pavilion serves as a strategic window that reaffirms the Kingdom's commitment to developing its defense sector and strengthening national competencies, contributing to the ambitious goal of localizing over 50% of military spending by 2030, he added.

During the exhibition, GAMI signed a cooperation agreement in the field of government quality assurance with the Defense Acquisition Program Administration in South Korea.

The agreement aims to boost the assurance and reliability of defense products and services carried out under purchasing and acquisition operations, in accordance with the local laws and regulations of both sides.

The agreement reflects the mutual desire of both parties to deepen joint cooperation in the field of defense industry and technology, in a way that achieves the national interests of both countries. The two parties also intend to expand the scope of cooperation by exchanging experiences and best practices in the field of government quality assurance for defense products and services.

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030.

It is presenting the latest locally developed defense technologies across military, defense, and security industries. It features a variety of military products aimed at highlighting the capabilities of the defense and military sectors. Additionally, it presents investors with a conducive investment environment and the promising opportunities available in the sector.

In addition to GAMI and the General Authority for Defense Development (GADD), the pavilion includes the World Defense Show (WDS), along with several national companies operating in the military industries sector. The companies include the Saudi Arabian Military Industries (SAMI), the National Company for Mechanical Systems (NCMS), the Middle East Propulsion Company (MEPC), the Saudi Chemical Company Holding (SCCH), AlKorayef Group, Life Shield Military Industries (LIFE SHIELD), Emaan International, QUDRA Industrial Company, and the Saudi Company for Aircraft Maintenance and Preparation (GDC).