Correction: Brent gains as Trump delays imposing reciprocal tariffs

The front-month ICE Brent contract has gained $0.52/bbl on the day, to trade at $75.33/bbl at 09.00 GMT.

PHOTO: Getty Images

The story below wrongly stated that the US government had imposed tariffs of 25% on Canadian and Mexican goods along with a 10% tariff on imports of Canadian energy products. Notably, the US government had only threatened to impose 25% tariffs on Canadian and Mexican goods and warned against imposing a 10% tariff on imports of Canadian energy products. 

Upward pressure:

Brent’s price gained some support after the US dollar dipped. The US dollar weakened after President Donald Trump announced a delay in imposing reciprocal tariffs, “given its [US dollar's] sensitivity to tariff developments,” IG Bank market strategist Yeap Jun Rong said.

During his election campaign, Trump promised to impose reciprocal tariffs on countries that have already imposed some tariffs on the US. A weaker greenback can make commodities like oil more affordable for non-dollar holders, ultimately boosting oil demand in the market.  

The US government had threatened that it would implement 25% tariffs on Canadian and Mexican goods from 4 February but did not go ahead with them, saying it would delay the tariffs by 30 days.

Besides, the International Energy Agency (IEA) raised oil demand growth forecast by 50,000 b/d and now expects it to grow by 1.10 million b/d this year. This news has also supported Brent.

“Sentiment was further supported by IEA’s more bullish outlook on the oil market,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Downward pressure:

Brent crude felt some downward pressure as concerns over Russian oil supply eased following media reports that the US and Russia have begun talks to resolve the conflict in Ukraine, which started in February 2022.

This development has raised the “prospect that those measures [sanctions on Russian oil] will be lifted and that Ukrainian drone attacks on Russia’s oil industry will abate,” Hynes said.

Brent’s price gains were also capped by the latest US Energy Information Administration (EIA) report on US stockpiles.

Commercial US crude oil inventories increased by 4.1 million bbls to touch 428 million bbls for the week ending 7 February, according to data from the EIA. A surge in US crude stocks can indicate a drop in oil demand, which can cap Brent's price rise.

By Aparupa Mazumder

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