Oil records weekly loss as traders assess impact of Trump tariffs

Opec+ to meet next week as US President asks group to cut cost of crude

US President Donald Trump says a 25 per cent tariff on exports from Canada and Mexico could take effect this weekend. EPA

Oil prices recorded a weekly loss on Friday as traders assessed the potential effect of US tariffs on imports from Canada and Mexico, two of its largest crude suppliers.

Brent, the benchmark for two thirds of the world’s oil, settled 0.14 per cent lower at $76.76 a barrel. West Texas Intermediate, the gauge that tracks US crude, was down 0.27 per cent at $72.53.

Brent fell 1 per cent for the week, while WTI declined nearly 3 per cent.

US President Donald Trump has warned that a 25 per cent tariff could take effect as soon as Saturday on exports from Canada and Mexico, unless the countries curb the trafficking of fentanyl into the US.

On Thursday, Trump said he would soon decide whether to exempt Canadian and Mexican oil imports from the tariffs. It remains uncertain whether crude oil would be affected.

As of October 2024, US refiners imported about 4.6 million barrels per day of crude from Canada and 563,000 bpd from Mexico, according to the US Energy Information Administration (EIA).

Crude oil prices started 2025 on a volatile note. US sanctions on Russia’s energy sector and cold weather pushed prices up. But concerns about a US-China trade war and weak Chinese economic data then pulled prices back down.

This month, the US Treasury Department broadened its sanctions against those aiding Russia's war in Ukraine, adding about 100 previously sanctioned entities to the list and imposing sanctions on 15 new ones.

However, analysts do not expect the move to significantly dent demand for Moscow’s oil.

“Russia has a track record in aggressively discounting its oil to incentivise shipping by a shadow fleet and continued purchases by price sensitive customers,” MUFG said in a research note on Thursday. The effect on oil prices is expected to be limited because the Opec+ alliance has about six million bpd in spare capacity, which can be brought online to ease supply tightness, the Japanese lender said.

“Global markets are still expected to swing into a protracted surplus and remain oversupplied for much of this year," it said.

Donald Trump calls on Saudi Arabia and Opec to cut oil prices

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Last week, Mr Trump asked Opec to bring down the cost of crude, saying lower oil prices would help put an end to the Ukraine war.

After his remarks, Saudi Energy Minister Prince Abdulaziz bin Salman met in Riyadh on Monday with his Iraqi and Libyan counterparts, Hayan Abdel Ghani and Khalifa Abdulsadek, to discuss efforts to stabilise global energy markets, the state-run Saudi Press Agency reported.

Opec+ will hold a meeting of its Joint Ministerial Monitoring Committee on February 3. “We expect the group to reiterate its existing plan to add barrels to the market starting in April,” said Giovanni Staunovo, strategist at UBS.

“As the group has commented, those plans can be adjusted if market fundamentals require more or less production,” he said in a research note on Wednesday.

In December, eight Opec+ members, including Saudi Arabia and Russia, agreed to prolong their voluntary oil production cuts of 2.2 million bpd, announced in November 2023, until the end of March 2025.

After that, the supply curbs will be phased out gradually on a monthly basis until the end of September 2026 to "support market stability".