03 Feb 2025

• WTI could appreciate due to potential supply disruptions following Trump tariffs on Canada and Mexico.
• Canadian energy products will incur a 10% duty, while Mexican energy imports will be subjected to the full 25% tariff.
• OPEC+ is unlikely to deviate from its current plan for a gradual increase in output when it meets on Monday.
• West Texas Intermediate (WTI) crude oil prices have declined to approximately $73.00 per barrel during the Asian trading session on Monday. Nevertheless, apprehensions regarding possible supply interruptions from Canada and Mexico—two of the United States' primary suppliers—have provided some support to crude oil prices, although expectations of reduced fuel demand have constrained any significant increases.
  
  On Saturday, President Donald Trump announced a 25% tariff on goods imported from Canada and Mexico, while China, the largest oil importer globally, will incur a 10% tariff. Energy products from Canada will be subjected to a 10% duty, while imports from Mexico will face the full 25% tariff, as stated by officials from the White House.
  
  These tariffs are scheduled to take effect on Tuesday and will remain in force until the fentanyl overdose crisis is deemed "resolved." In retaliation, Canada, Mexico, and China have pledged to implement countermeasures against these extensive trade restrictions.
• Canada and Mexico represent the largest sources of crude oil imports for the United States, accounting for approximately 25% of the oil refined by American facilities into products such as gasoline and heating oil, according to the US Department of Energy. The newly imposed tariffs are expected to raise costs for heavier crude grades, which are vital for efficient refinery operations. This situation may lead to diminished profitability and necessitate production reductions, as indicated by industry sources to Reuters.
  
  In the meantime, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are experiencing mounting pressure from Trump to reconsider their production cuts. Nevertheless, OPEC+ representatives informed Reuters that the group is unlikely to alter its existing strategy of gradually increasing output during their meeting on Monday.