Oil Prices Decline Amid Trump’s Energy Plans and Stronger Dollar
Oil prices fell on Tuesday as traders evaluated U.S. President Donald Trump’s strategies to boost oil and gas production in the United States alongside his decision to delay imposing new tariffs that were expected to take effect immediately.
Price Movements
Brent crude futures dropped by $1.52, or 1.9%, to $78.63 per barrel by 14:06 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures decreased by $2.14, or 2.8%, settling at $75.74 per barrel. There was no settlement in the U.S. market on Monday due to a public holiday.
The strengthening U.S. dollar exerted downward pressure on oil prices today, making oil more expensive for holders of other currencies.
Tamas Varga, an analyst at PVM, commented, “The current weakness is most likely Trump and dollar-related.” He added that the dollar rebounded after Trump’s statements about imposing tariffs on Mexico and Canada, noting that this strength has a negative impact on oil prices.
Impact of Trump’s Policies
Trump mentioned he is considering imposing 25% tariffs on imports from Canada and Mexico starting February 1st instead of immediately, which contributed to the oil price decline. However, in the future, tariffs on Canadian crude might push the market upwards.
Although no sweeping new trade measures have been imposed yet, Trump has instructed federal agencies to investigate unfair trade practices by other countries. He also suggested the U.S. “might” stop buying oil from Venezuela, the second-largest buyer of Venezuelan oil after China.
Trump also promised to refill strategic reserves, a move expected to increase oil prices by enhancing demand for U.S. crude.
Other Market Influences
Today’s prices were also affected by the potential resolution of shipping disruptions in the Red Sea. The Yemeni Houthi group stated they would restrict their attacks to ships related to Israel if a full ceasefire in Gaza is implemented.
Ole Hansen, an analyst at Saxo Bank, remarked, “Reopening the Suez Canal will provide a supply glut in the short term due to shorter travel times, which might also affect prices in the near future.”
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