U.S.-China tariffs threat hits oil prices, market jitters grow
Brokers report that oil prices on the New York Mercantile Exchange in the United States are falling due to investors' concerns about President Donald Trump's announcement of tariffs on China.
A barrel of West Texas Intermediate crude for March delivery costs about $100 CAD on the NYMEX in New York, down by 0.46%. Brent on ICE for March is priced at around $105 CAD a barrel, down by 0.33%.
Oil prices are falling
Concerns about tariffs on China are growing in the markets after U.S. President Donald Trump announced that the U.S. might impose tariffs starting next month.
Donald Trump said that his threats to impose 10% tariffs on China, on all imports, are still valid and indicated that they could be implemented as early as February.
We are talking about 10% tariffs for China, considering the fact that they are sending fentanyl to Mexico and Canada, Trump said on Tuesday at the White House.
- Likely February 1st - that's the date we are considering, he added.
Comments by the U.S. President, which were made a day after his inauguration, suggest that the "relief tariff" for China, in terms of tariffs, may be short-lived.
On Monday, on his first day in office at the White House, Trump held off on ordering tariffs directed specifically at China, while indicating that tariffs could also apply to Mexico and Canada, starting February 1st, at 25%.
Both countries are major exporters of goods to the United States, including crude oil processed by American refineries.
"Flood" of oil heading to the USA
A genuine "flood" of Canadian oil is already heading south through pipelines to the United States.
Susan Bell, an analyst at Rystad Energy, said Canadian oil suppliers are trying to "push" as much crude as possible to the United States before American tariffs are implemented.
Meanwhile, the U.S. President has announced that he will likely impose additional sanctions on Russia if Vladimir Putin refuses to negotiate ending the war in Ukraine.
This raises concerns in the markets about escalating the U.S. trade war on many fronts.
- However, the oil markets' attention is slowly shifting from risks associated with Western sanctions on Russia to a more tangible risk - the escalation of trade tensions, says Warren Patterson, head of commodity strategy at ING Groep NV.
