(Bloomberg) — Oil rose as the market digested the fallout from President Donald Trump’s order of potential reciprocal tariffs on US trading partners.
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Brent (BZ=F) was near $75 a barrel after a modest decline on Thursday, while West Texas Intermediate (CL=F) was above $71 a barrel. The US president signed a measure to propose new levies on a country-by-country basis. It could take weeks or months to complete, but raised the prospect of more trade tensions.
Tariffs on crude from Canada and Mexico are set to start next month, alongside a levy on steel, but the US oil industry is confident it can win exemptions from the Trump administration, according to the American Petroleum Institute.
Oil is heading for a slight gain this week, the first since mid-January, following signs that US sanctions were tightening the flow of Russian crude. However, Trump and his counterpart Vladimir Putin have agreed to talks on ending the war in Ukraine, raising speculation risks to supply could ease.
“Any further escalation in trade tensions, particularly related to new tariffs or retaliatory measures, could impact global economic growth and, by extension, oil demand,” Priyanka Sachdeva, a senior market analyst for brokerage Phillip Nova Pte, wrote in a note.
Sanctions on Russia, along with Iran, prompted the International Energy Agency to once again cut its expectations for a global oil surplus this year. The outlook for stronger demand growth in Asia contributed to the IEA’s reduced forecast, according to a monthly report released on Thursday.
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