Tariffs Cast Shadow on Oil Market

29 Jan 2025 , 10:28 AM

As investors mostly ignored a rise in the weekly crude inventories in the United States and considered the effects of possible U.S. taxes on imports from Canada and Mexico, oil prices remained stable on Wednesday.

U.S. crude prices were up 4 cents, or 0.1%, at $73.81 a barrel, while Brent crude futures had down 2 cents to $77.47 a barrel.

Early this week saw benchmarks drop to multi-week lows as concerns about the energy demand to power data centres shook the entire energy sector due to news of growing interest in Chinese startup DeepSeek’s low-cost artificial intelligence (AI) model. Weak economic data from China further soured the demand outlook.

While considering new tariffs on China, the White House said Tuesday that U.S. President Donald Trump still intends to impose 25% tariffs on Canada and Mexico on Saturday.

Trump claimed he was considering putting 25% charges on goods from Canada and Mexico on February 1 due to illegal immigration and fentanyl entering the US, but he did not immediately enact tariffs on Monday as he had previously stated.

The impact of any increased taxes on the countries’ oil imports into the United States is still unknown. According to data from the Energy Information Administration (EIA), Mexico contributed 733,000 barrels per day of oil to the United States in 2023, while Canada supplied 3.9 million barrels per day, or about half of total imports for the year.

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