IEA predicts oil supply surplus amid weak China demand in 2025

LONDON: Oil prices rose on Monday after US President Donald Trump imposed tariffs on Canada, Mexico and China, raising fears of supply disruption, though gains were capped by concern over what could be an economically damaging trade war.

Brent crude futures rose $1.28, or 1.7 percent, to $76.95 a barrel by 3:32 p.m. Saudi time after touching a high of $77.34.

US West Texas Intermediate crude futures were up $1.89, or 2.6 percent, at $74.42 after touching their highest since Jan. 24 at $75.18.

Trump’s sweeping tariffs on goods from Mexico, Canada and China kicked off a trade war that could dent global growth and reignite inflation.

The tariffs, which will take effect on Feb. 4, include a 25 percent levy on most goods from Mexico and Canada, with a 10 percent tariff on energy imports from Canada and a 10 percent tariff on Chinese imports.

“The relatively soft stance on Canadian energy imports is likely rooted in caution,” Barclays analyst Amarpreet Singh said in a note.

“Tariffs on Canadian energy imports would likely be more disruptive for domestic energy markets than those on Mexican imports and might even be counterproductive to one of the president’s key objectives — lowering energy costs.”

Goldman Sachs analysts expect the tariffs to have limited near-term impact on global oil and gas prices.

Canada and Mexico are the top sources of US crude imports, together accounting for about a quarter of the oil US refiners process into fuels such as gasoline and heating oil, according to the US Department of Energy.

The tariffs will raise costs for the heavier crude grades that US refineries need for optimum production, industry sources said.

Gasoline pump prices in the US are certainly expected to rise with the loss of crude for refineries and the loss of imported products, said Mukesh Sahdev at Rystad Energy.

Trump has already warned that the tariffs could cause “short-term” pain for Americans.

US gasoline futures jumped 2.5 percent to $2.11 a gallon after touching the highest level since Jan. 16 at $2.162.

“It is clear that the tariffs will have a negative effect on the global economy, with physical markets set to get tighter in near term, pushing crude prices higher,” said Panmure Liberum analyst Ashley Kelty.

Investors will also be watching for news from an OPEC+ meeting on Monday, with expectations that the oil producer group will stick to its current plan of gradual increases to output.

Rystad’s Sahdev added that tariffs, if kept for long, have the potential to cause production losses in Canada and Mexico, which could help OPEC+ to unwind output curbs.

LONDON: Oil prices were steady on Friday but on course for weekly declines as markets waited to see if US President Donald Trump will follow through on his threat to impose tariffs on Mexico and Canada on Saturday.

Brent crude futures for March, which expire on Friday, were down 9 cents at $76.78 a barrel by 5:20 p.m. Saudi time. US West Texas Intermediate crude declined 2 cents to $72.71.

For the week, the Brent and WTI benchmarks were set for declines of 2.2 percent and 2.6 percent respectively.

Oil came under pressure from the potential negative economic impact of US tariffs against Canada, Mexico and China, said PVM analyst Tamas Varga, adding that potential dollar appreciation as a result of tariffs also weighed on oil.

Trump has threatened to impose a 25 percent tariff on Canadian and Mexican exports to the US if those two countries do not clamp down on shipments of fentanyl and on illegal migration across US borders.

Canada and Mexico are the two largest crude oil exporters to the US, but it is unclear if oil would be included among the tariffs. Trump said on Thursday he would soon decide whether to exclude Canadian and Mexican oil imports from the tariffs.

Tariffs would likely result in large US refinery run cuts, said Energy Aspects analyst Livia Gallarati.

“Our base case has been that, if tariffs are announced, they will include a grace period for negotiations and that oil is likely eventually to be carved out from any tariffs,” Gallarati added.

The market is also awaiting the OPEC+ meeting scheduled for Monday.

Kazakhstan’s energy minister said on Wednesday that the group is set to discuss Trump’s plans to raise US oil production and take a joint stance on the matter at next week’s OPEC+ meeting.

“OPEC will likely comply with the US demand to increase production to avoid Trump’s ire. And they might announce a gradual unwinding of voluntary cuts, if not from April, then from the second half of the year,”