Oil prices rise on supply worries, but Trump’s tariffs limit gains
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Key Points: Brent and WTI gain 0.7% after nearly 2% rise in the previous session; Trump imposes 25% tariffs on steel and aluminum imports; Fed expected to hold rates steady until next quarter, per Reuters poll.
Oil Prices Continue Rebound Amid Supply Concerns
Brent crude futures climbed 0.72% to $76.42 per barrel, while West Texas Intermediate (WTI) rose 0.69% to $72.82 early Tuesday, extending gains from the prior session after three consecutive weeks of losses. Oil prices are finding support from tightening supply dynamics, with concerns over Russian and Iranian exports growing due to U.S. sanctions and geopolitical risks. Russian oil production fell short of its OPEC+ quota in January, coming in at 8.962 million barrels per day (bpd)—16,000 bpd below the agreed level. Additionally, U.S. sanctions on Russian oil shipments to China and India have disrupted trade flows, raising fears of a supply shortfall. Adding to the concerns, Trump’s administration reinstated maximum pressure on Iranian oil exports, targeting networks that ship Iranian crude to China. The renewed crackdown could tighten global oil supply further, particularly for key Asian markets.
Tariffs Weigh on Demand Outlook
Despite the bullish supply-side factors, Trump’s latest tariff hikes are acting as a counterweight to oil price gains. The U.S. President announced a 25% tariff on all steel and aluminum imports, impacting key trading partners such as Canada, Mexico, Brazil, and South Korea. The move risks intensifying global trade tensions, potentially slowing economic growth and curbing energy demand. Last week, Trump also imposed an additional 10% tariff on Chinese imports, to which Beijing retaliated with its own tariffs on U.S. goods, including crude oil.
Fed Rate Decision and Economic Implications
Beyond trade tensions, investors are also assessing the Federal Reserve’s monetary policy outlook. According to a Reuters poll, the Fed is expected to hold rates steady until the next quarter, rather than cutting in March as previously anticipated. With Trump’s tariff policies raising inflation risks, the Fed may be forced to maintain higher interest rates for longer, potentially limiting economic expansion and oil demand growth.
Market Focus This Week
Tuesday: API Crude Oil Stock Report; Wednesday: EIA Weekly Inventory Data; Wednesday: U.S. CPI Inflation Report; Wednesday-Thursday: Fed Chair Powell’s Testimony Before Congress. With oil markets caught between supply constraints and demand concerns, upcoming inflation data, inventory reports, and central bank commentary could dictate the next major price move.
Oil Prices Continue Rebound Amid Supply Concerns
Brent crude futures climbed 0.72% to $76.42 per barrel, while West Texas Intermediate (WTI) rose 0.69% to $72.82 early Tuesday, extending gains from the prior session after three consecutive weeks of losses. Oil prices are finding support from tightening supply dynamics, with concerns over Russian and Iranian exports growing due to U.S. sanctions and geopolitical risks. Russian oil production fell short of its OPEC+ quota in January, coming in at 8.962 million barrels per day (bpd)—16,000 bpd below the agreed level. Additionally, U.S. sanctions on Russian oil shipments to China and India have disrupted trade flows, raising fears of a supply shortfall. Adding to the concerns, Trump’s administration reinstated maximum pressure on Iranian oil exports, targeting networks that ship Iranian crude to China. The renewed crackdown could tighten global oil supply further, particularly for key Asian markets.
Tariffs Weigh on Demand Outlook
Despite the bullish supply-side factors, Trump’s latest tariff hikes are acting as a counterweight to oil price gains. The U.S. President announced a 25% tariff on all steel and aluminum imports, impacting key trading partners such as Canada, Mexico, Brazil, and South Korea. The move risks intensifying global trade tensions, potentially slowing economic growth and curbing energy demand. Last week, Trump also imposed an additional 10% tariff on Chinese imports, to which Beijing retaliated with its own tariffs on U.S. goods, including crude oil.
Fed Rate Decision and Economic Implications
Beyond trade tensions, investors are also assessing the Federal Reserve’s monetary policy outlook. According to a Reuters poll, the Fed is expected to hold rates steady until the next quarter, rather than cutting in March as previously anticipated. With Trump’s tariff policies raising inflation risks, the Fed may be forced to maintain higher interest rates for longer, potentially limiting economic expansion and oil demand growth.
Market Focus This Week
Tuesday: API Crude Oil Stock Report; Wednesday: EIA Weekly Inventory Data; Wednesday: U.S. CPI Inflation Report; Wednesday-Thursday: Fed Chair Powell’s Testimony Before Congress. With oil markets caught between supply constraints and demand concerns, upcoming inflation data, inventory reports, and central bank commentary could dictate the next major price move.