Oil Prices Steady ahead of Trump's Threatened Tariffs on Canada, Mexico

An offshore oil rig is pictured off the coast of Huntington Beach, California, US, November 14, 2024. (Reuters)
An offshore oil rig is pictured off the coast of Huntington Beach, California, US, November 14, 2024. (Reuters)
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Oil Prices Steady ahead of Trump's Threatened Tariffs on Canada, Mexico

An offshore oil rig is pictured off the coast of Huntington Beach, California, US, November 14, 2024. (Reuters)
An offshore oil rig is pictured off the coast of Huntington Beach, California, US, November 14, 2024. (Reuters)

Oil prices were little changed on Thursday as investors focused on tariffs threatened by US President Donald Trump on Mexico and Canada, the two largest suppliers of crude to the United States.

Brent crude futures were down 10 cents at $76.48 a barrel at 1318 GMT. US crude futures were down 16 cents to $72.46. US crude futures had settled at their lowest price this year on Wednesday.

"All oil considerations are in the shadow of what tariffs might be announced on Canada and Mexico," said John Evans, an analyst at oil broker PVM. Markets are "mesmerised by what will come after February 1 when any trade restrictions are promised to be unveiled."

The White House on Tuesday reaffirmed Trump's plan to impose 25% tariffs on imports from Canada and Mexico. On Wednesday, the president's nominee to run the Commerce Department said the two countries can avoid this if they act swiftly to close their borders to fentanyl, Reuters reported.

However, IG market analyst Tony Sycamore said traders had already priced in Trump's tariffs: "(this is) a major reason why crude oil is trading where it is."

Winter storms hit US demand last week, with crude oil stockpiles in the US rising by 3.5 million barrels as refiners cut production. Analysts had expected a 3.2 million-barrel rise, according to a Reuters poll.

On the supply side, the latest US sanctions on Moscow are squeezing crude oil exports from Russia's western ports, which are set to fall 8% in February from the January plan as Moscow boosts refining, traders said and Reuters calculations showed.

Investors are also looking ahead to a meeting by the Organization of the Petroleum Exporting Countries and its allies including Russia, together called OPEC+, scheduled for Feb. 3.

The group is set to discuss Trump's efforts to raise US oil production and take a joint stance on the matter, Kazakhstan said on Wednesday.



EU Sees €28 Billion Hit from Trump’s Steel, Aluminum Tariffs

FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
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EU Sees €28 Billion Hit from Trump’s Steel, Aluminum Tariffs

FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa

The European Union estimates that the first wave of Donald Trump’s steel and aluminum tariffs will hit as much as €28 billion ($29.3 billion) of the bloc’s exports in what would be a massive escalation in the US president’s trade war, Bloomberg reported.

The amount of goods — which the EU assesses will include derivative products as well — would be about four times larger than the last time Trump targeted the bloc’s metals sector, according to people familiar with the EU’s thinking.

EU trade chief Maros Sefcovic debriefed the bloc’s ambassadors on Friday after his visit to Washington to meet with his US counterparts. He cautioned that the situation is in flux and the details and the scope of any tariffs could still change, said the people, who spoke on the condition of anonymity.

As part of his effort to rewrite global trade rules, Trump announced a series of duties including 25% tariffs on steel and aluminum exports that could take effect as soon as March 12. He’s also announced reciprocal tariffs based on policies of partners that are seen as obstacles to US trade.

The European Commission, which has authority over EU trade actions, declined to comment.

For the EU, the fight over American metals tariffs started in 2018 during Trump’s first term, when the US hit nearly $7 billion of European steel and aluminum exports with duties, citing national security concerns. At the time, officials in Brussels scoffed at the notion that the EU posed such a threat.

In that first salvo, the US hit steel goods with 25% tariffs and aluminum with 10%, and included exemptions for certain products. Bloomberg reported earlier that this time around, no exemptions were planned.

The 27-nation bloc retaliated by targeting politically sensitive companies with retaliatory duties, including Harley-Davidson Inc. motorcycles and Levi Strauss & Co. jeans. The measures were applied product-by-product and included agricultural goods and apparel in addition to steel and aluminum products.

The two sides agreed to a temporary truce in 2021, when the US partly removed its measures and introduced a set of tariff-rate quotas above which duties on the metals are applied, while the EU froze all of its restrictive measures.

The EU has said that it would respond quickly and proportionally to US tariffs and could reactivate as a first step the lists previously suspended. The commission has been preparing various lists with different sectors and goods targeted with the principle of causing more harm on the American side, including in sensitive constituencies, Bloomberg previously reported.

The commission has said that unfreezing the suspended tariffs, which are on pause until the end of March, could be done quickly.

Sefcovic, who met with US Commerce Secretary Howard Lutnick, Jamieson Greer, his pick for US trade representative and National Economic Council Director Kevin Hassett this past week, told EU envoys that the atmosphere was positive but no negotiations were conducted yet, said the people.

According to Bloomberg, Sefcovic said he used the meeting as a first point of contact to open the channels of communication and to try to debunk claims by the Americans that he said were false, including that Europe’s value added tax is unfair to the US, they said.

In order to avoid a trade clash, Sefcovic offered to his American counterparts a deal to lower tariffs on industrial goods, including cars, one of Trump’s longstanding demands.