Brent gains on looming tariff threats

The front-month ICE Brent contract has gained $0.51/bbl on the day, to trade at $73.39/bbl at 09.00 GMT.

PHOTO: Oil pumpjacks. Getty Images

Upward pressure:

US President Donald Trump has once again threatened to impose 25% tariffs on Mexican and Canadian goods on 4 March, along with an extra 10% duty on Chinese imports, Reuters reports.

To clarify, the fresh China tariffs are in addition to the 10% tariff levied earlier this month.

“The proposed tariffs scheduled to go into effect on March fourth [4 March] will, indeed, go into effect as scheduled,” the US President said on social media platform Truth Social.

The news has rekindled supply-related concerns in the global oil market and supported Brent’s price gains, as Canada and Mexico are “two key suppliers of oil to the US,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

A tariff on oil imports could drive up the cost of crude oil. US refiners import about 4 million b/d from Canada and about 400,000 b/d of crude oil from Mexico, according to a Reuters report.

“The tariffs threaten to disrupt North America’s tightly integrated oil industry and raise demand for US crude to substitute any Canadian or Mexican oil,” Hynes added.

Downward pressure:

Brent’s price felt some downward pressure amid the possibility of a ceasefire agreement between Russia and Ukraine.

A ceasefire deal could see the US lifting its sanctions on Russian oil exports, which in turn could increase global oil supply, according to market analysts.

Brent crude’s price gains were partially capped on “improving prospects for a Russia-Ukraine peace deal,” two analysts from ING Bank noted.

By Aparupa Mazumder

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