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West Texas Intermediate advanced to US$73.70 on Friday afternoon, up 1.6%
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Published Jan 30, 2025 • Last updated 1 day ago • 2 minute read
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Oil rose in late trading after U.S. President Donald Trump said the U.S. would impose tariffs on imports of crude, a move that threatens to disrupt flows across North America’s tightly integrated energy market.
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West Texas Intermediate advanced to US$73.70 at 4:37 p.m. in New York on Friday, up 1.6 per cent from its settlement price. Trump, speaking in the Oval Office, said he would implement tariffs on a wide range of imports in the coming months, including steel, aluminum, oil and gas, pharmaceuticals, as well as semiconductors. Still, Trump said he may reduce tariffs on oil from Canada, bringing them down to 10 per cent, after setting an original levy for the country’s goods at 25 per cent.
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The latest statements add another twist to a tumultuous day in the oil market, when prices were repeatedly buffeted by conflicting messages on the timing and scope of the planned levies against major U.S. trading partners and crude suppliers Canada and Mexico.
Heavy Western Canadian Select crude for delivery in the second quarter traded at about US$15.30 a barrel less than WTI after Trump’s latest statement, according to people familiar with the pricing. That discount is US$1 a barrel wider than before the statement.
WTI slid earlier in the day on a report the measures would be delayed and some goods may be exempted from the restrictions. Futures later pared those losses — and even briefly flipped positive — after the White House denied the report and reiterated plans to impose the tariffs on Feb. 1.
The inclusion of crude in the tariffs would risk major reverberations across the oil market. Canada ships about 4 million barrels a day to the U.S., and the countries’ energy markets are closely integrated, with refiners in the Midwest the most vulnerable to disruptions.
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Valero Energy Corp., the third-biggest U.S. fuelmaker by market value, expects processors to cut production if tariffs hit oil imports. Canadian crude prices have been volatile in the weeks since the tariffs were first floated, while premiums for gasoline and diesel have risen in recent days.
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“The inclusion of Canada oil in a 25 per cent tariff on Canada and Mexico would likely initially raise gasoline prices in the U.S. Midwest, and eventually weigh on crude prices globally (via weaker demand) and especially in Canada, where producers have limited export options,” Goldman Sachs Group Inc. analysts including Daan Struyven said in a note.
With assistance from Robert Tuttle
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