Oil prices slipped to their lowest levels in a week on Wednesday as markets weighed the potential impact of U.S. President Donald Trump’s proposed tariffs on global economic growth and energy demand.
Brent crude futures fell by $0.29 (0.4%) to settle at $79.00 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped $0.39 (0.5%) to close at $75.44 per barrel.
This marks a notable streak of losses for both benchmarks, with Brent falling for the fifth consecutive day—the first time since September—and WTI recording a four-day decline for the first time since November. Both benchmarks hit their lowest levels since January 9 for a second straight day, reflecting growing uncertainty in the energy markets.
The market’s attention has started to pivot from ongoing U.S. sanctions against Russia to Trump’s potential trade policies. The president recently proposed a 10% tariff on Chinese imports starting February 1, alongside the possibility of levying 25% tariffs on goods from Mexico and Canada.
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Trump also hinted at duties on European imports and threatened further measures against Russia if it fails to agree to a peace deal with Ukraine.
“Possible sanctions under the new Trump administration remain unclear, but proposed tariffs targeting Canada and Mexico now seem to be at the forefront of trader uncertainties,” analysts at Ritterbusch and Associates noted in a recent briefing.
The looming threat of tariffs has added pressure to the energy sector. ING analysts observed, “The oil market’s focus is shifting toward President Trump’s potential trade policies, which have heightened concerns about global demand.”
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In Europe, leaders like French President Emmanuel Macron and German Chancellor Olaf Scholz worked to present a united front during a meeting in Paris, as the continent struggles to address the implications of potential U.S. tariffs.
Meanwhile, Iran, an OPEC member facing U.S. sanctions, signaled a more conciliatory tone at the Davos summit, offering talks on economic opportunities and reiterating that it does not seek nuclear weapons.
The U.S. energy landscape also faces changes as Trump suggested his administration would “probably” stop purchasing oil from Venezuela, another OPEC nation under U.S. sanctions.
The United States imported an average of 200,000 barrels per day (bpd) of Venezuelan oil in the first 10 months of 2024, doubling the 2023 average of 100,000 bpd, according to the U.S. Energy Information Administration (EIA).
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