LONDON: Oil prices fell on Tuesday as investors assessed U.S. President Donald Trump’s plans to apply new tariffs later than expected while boosting oil and gas production in the United States.
Brent crude futures were down $1.42, or 1.77%, to $78.73 per barrel at 1116 GMT. U.S. West Texas Intermediate crude futures were down by $1.97, or 2.53%, at $75.91. There was no settlement in the U.S. market on Monday due to a public holiday.
Pressuring prices on Tuesday was a stronger U.S. dollar, as its strengthening makes oil more expensive for holders of other currencies.
“The current weakness is most probably Trump and dollar-related,” said PVM analyst Tamas Varga.
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The dollar rebounded after Trump’s comments on imposing tariffs against Mexico and Canada, Varga added, noting that the dollar’s strength is negatively impacting oil prices.
Trump said he was thinking of imposing 25% tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.
“The initial sense of relief that trade measures weren’t an immediate focus on Trump’s ‘Day 1’ was quickly offset by reports of 25% tariffs on Mexico and Canada as early as February, which saw risk sentiments turn,” said Yeap Jun Rong, market strategist at IG.
Trump did not impose any sweeping new trade measures right after his inauguration on Monday, but told federal agencies to investigate unfair trade practices by other countries.
The U.S. president also said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Trump also promised to refill strategic reserves, a move that could be bullish for oil prices by boosting demand for U.S. crude oil.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea. Yemen’s Houthis on Monday said they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
“Reopening of the Suez Canal will create a short-term abundance of supply given the shorter journey times, and that may also weigh on prices in the short term,” said Saxo Bank analyst Ole Hansen.
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