Oil prices stayed steady on Wednesday as investors thought about the possibility of new U.S. tariffs on imports from Canada and Mexico. Brent crude dropped slightly, costing $77.47 a barrel, while U.S. crude went up a bit to $73.81 a barrel. Earlier this week, prices fell to their lowest in weeks after news of a popular AI model from a Chinese startup called DeepSeek raised worries about energy needs for data centers. Weak economic data from China also made investors concerned about future oil demand.
On Tuesday, the White House announced that President Donald Trump plans to put a 25% tariff on Canada and Mexico starting Saturday, while also considering new tariffs on China. This decision was delayed from Monday when Trump initially promised to act. He mentioned these tariffs are related to issues like illegal immigration and fentanyl smuggling into the U.S. It’s uncertain how these new tariffs would affect oil imports from Canada and Mexico. In 2023, Canada supplied the U.S. with 3.9 million barrels of oil per day, which is about half of all imports, while Mexico provided 733,000 barrels.
Investors are trying to figure out how Trump’s tariffs will impact the energy market. Yuki Takashima from Nomura Securities explained that if tariffs are applied, the energy market in the U.S. might face immediate problems, but there could also be lower demand later due to higher prices.
Meanwhile, some traders adjusted their positions in the oil market due to the shock from the DeepSeek news. Technology stocks rebounded on Tuesday after a rough day, while oil stock changes didn’t significantly affect crude prices. Recent reports indicated that crude oil and gasoline stocks rose, but distillate inventories fell. The U.S. Department of Energy’s EIA is expected to release new inventory data soon.
In the Middle East, concerns about oil supply from Libya lessened after the National Oil Corporation confirmed that exports are running normally after talks with protesters. Saudi Arabia’s energy minister, along with other OPEC+ officials, have discussed Trump’s request for lower oil prices ahead of a meeting next week.
Leave a Reply