Key Points
- Oil prices rebounded as the U.S. confirmed tariff plans.
- Libya’s oil export disruptions eased, but supply risks persist.
- Weak Chinese manufacturing data raises concerns about global demand.
Following the White House’s reaffirmation of U.S. President Donald Trump’s intentions to put tariffs on Canadian and Mexican imports this week, oil prices rebounded Tuesday from multi-week lows.
Oil prices rebound after hitting multi-week lows on Monday
Concerns about declining demand brought on by softer Chinese economic statistics and warmer weather elsewhere restrained gains.
At $77.49 per barrel, Brent crude futures ended the day up 41 cents, or 0.53%. At $73.77 per barrel, U.S. West Texas Intermediate (WTI) oil futures increased 60 cents, or 0.82%. WTI fell to its lowest level since January 2 on Monday, and Brent fell to its lowest level since January 9.
According to the Reuters, Trump is contemplating fresh tariffs on Chinese imports and plans to impose 25% tariffs on imports from Canada and Mexico beginning on Saturday.
Price Futures Group analyst Phil Flynn stated that the market was tense due to Trump’s remarks regarding tariffs. He went on to say that the tariffs might make it more difficult for energy items to move between the United States and Canada and Mexico.
Reports of supply interruptions in Libya caused oil prices to initially rise when local protesters stopped crude loadings at the ports of Ras Lanuf and Es Sider, endangering some 450,000 barrels of exports per day.
But after negotiations with demonstrators, Libya’s National Oil Corporation declared that exports were proceeding as planned, allaying concerns.
“Weaker Chinese PMI numbers that raise more questions about China’s oil demand outlook, along with the overall risk environment caution, may act as a drag on oil prices,” IG analyst Yeap Jun Rong stated.
Chinese economic slowdown weighs on global oil demand outlook
With the implementation of U.S. sanctions on the Russian oil trade, China’s demand for petroleum is also anticipated to decrease. FGE analysts predict that because Shandong Port Group has banned tankers connected to U.S.-sanctioned firms, refineries in Shandong province may lose up to 1 million barrels of oil supply per day.
According to sources who spoke to Reuters, independent Chinese refineries have already started to suspend operations or prolong maintenance periods in reaction to tax and tariff policies that have increased losses.
After a surge in natural gas and diesel during previous cold weather, predictions for warmer-than-normal temperatures this week are reducing demand for heating fuels in the United States.
As traders evaluate the effects of U.S. tariffs and sanctions, oil prices continue to be turbulent. “The implications of U.S. policy will not be fully understood for some time,” stated Ashley Kelty, a Panmure Liberum analyst.
