Oil Extends Loss as Market Weigh Wider Trump Sanctions

Brent futures declined by 29 cents or 0.4 per cent during the session to settle at $79.00 a barrel and the US West Texas Intermediate (WTI) lost 39 cents or 0.5 per cent to trade at $75.44 per barrel.

Possible sanctions under the new Trump administration remain unclear, with possible tariffs related to Canada and Mexico now seemingly at the forefront of trader uncertainties.

The American president also vowed to hit the European Union with tariffs and said his administration was discussing a 10 per cent duty on Chinese imports because the narcotic fentanyl is being sent from China to the US via Mexico and Canada.

Mr Trump had previously threatened a 10 per cent duty on Chinese imports but realigned that with the February 1 deadline.

On its part, China said it was willing to maintain communication with the US and sought to promote stable and sustainable ties.

In Europe, French President, Mr Emmanuel Macron, and German Chancellor, Mr Olaf Scholz, insisted Europe was strong while expecting difficulties due to threats of tariffs from the US.

The US president also said his administration would “probably” stop buying oil from Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC) under US sanctions.

The US imported about 200,000 barrels per day of oil from Venezuela during the first 10 months of 2024, up from an average of 100,000 barrels per day in 2023, according to the latest data from the US Energy Information Administration (EIA).

Saudi Arabia’s crude oil exports in November jumped to their highest in eight months while Libya is planning to boost its crude refining capacity from the current 300,000 barrels per day to 400,000 barrels per day.

The American Petroleum Institute (API) estimated that crude oil inventories in the US increased by 1 million barrels for the week ending January 17. For the week prior, the API reported a draw of 2.6 million barrels in US crude oil inventories amid build season, while product inventories saw a hefty build for multiple weeks in a row.

In 2024, crude oil inventories dropped by more than 12 million barrels, according to the API’s inventory data, with the downward trend continuing beyond the new year.

Official data from the US EIA will be released later on Thursday with both weekly reports delayed by a day due to the US Martin Luther King Jr. Day holiday on Monday.