Oil falls to lowest level in a week amid uncertainty over Trump tariffs by Reuters

Written by Scott DiSavino

(Reuters) – Oil prices fell to a new one-week low on Wednesday as the market weighed the impact of tariffs proposed by US President Donald Trump on global economic growth and energy demand.

Futures fell 29 cents, or 0.4%, to settle at $79.00 a barrel, while US West Texas Intermediate crude fell 39 cents, or 0.5%, to settle at $75.44.

This puts Brent crude lower for the fifth straight day for the first time since September, and WTI lower for the fourth straight day for the first time since November. The two benchmarks closed at their lowest levels since January 9 for the second day in a row.

“Potential sanctions under the new Trump administration remain unclear, as potential tariffs related to Canada and Mexico now appear to be at the forefront of trade uncertainties,” analysts at energy consultancy Ritterbusch & Co. said in a note.

Trump said his administration is discussing imposing 10% tariffs on goods imported from China on February 1, the same day he previously said Mexico and Canada could face tariffs of about 25%.

He also pledged to impose duties on European imports, without providing further details, and threatened to impose new customs duties on Russia if it did not reach an agreement to end its war in Ukraine.

“The oil market’s attention is slowly shifting from US sanctions against Russia towards President Trump’s potential trade policy,” ING analysts said, adding that the energy complex is under pressure with the growing threat of tariffs.

In Europe, French President Emmanuel Macron and German Chancellor Olaf Scholz sought to show unity at a meeting in Paris, as Europe struggles to respond with one voice to US threats to impose tariffs.

The US President also said his administration would “most likely” stop buying oil from Venezuela, a member of the Organization of the Petroleum Exporting Countries that is subject to US sanctions.

The United States imported about 200,000 barrels per day of oil from Venezuela during the first 10 months of 2024, up from an average of 100,000 barrels per day in 2023, according to the latest data from the US Energy Information Administration (EIA).

Iran, another member of the Organization of the Petroleum Exporting Countries (OPEC) and subject to US sanctions, sent a conciliatory message to Western leaders in Davos on Wednesday, where a senior official denied it wanted nuclear weapons and offered talks on the opportunities.

In other OPEC news, Saudi Arabia’s crude oil exports jumped in November to their highest levels in eight months.

US crude withdrawal is expected to expand

Analysts expected inventories to fall by about 1.6 million barrels last week, ahead of data due from the American Petroleum Institute trade group later on Wednesday and the US Energy Information Administration on Thursday. (EIA/S) (API/S)

Both weekly reports were postponed by one day due to the Martin Luther King Jr. Day holiday in the US on Monday.

If true, this would be the first time energy companies have pulled oil from inventory for nine straight weeks since January 2018 when they pulled oil for a record 10 straight weeks. This compares to a decline of 9.2 million barrels in the same week last year and an average withdrawal of 800,000 barrels over the past five years (2020-2024).

Separately, several ports in Texas began resuming operations Wednesday after Winter Storm Enzo disrupted power and shipping operations earlier this week.