Oil Market Rises as US Pauses Tariffs on Mexico

Brent futures went up by 27 cent or 0.36 per cent to close at $75.94 a barrel and the US West Texas Intermediate (WTI) crude gained 60 cents or 0.8 per cent to settle at $73.13 per barrel.

Mr Trump planned imposition of tariffs on Canada, Mexico and China is supposed to kick off on Tuesday. Canada and Mexico, are two of the US main crude suppliers.

The proposed tariffs include a 25 per cent levy on most goods from Mexico and Canada, with a 10 per cent tariff on energy imports from Canada and a 10 per cent tariff on Chinese imports.

The US president had upended US-Mexico ties over the weekend when he announced the 25 per cent tariffs and accused the Claudia Sheinbaum’s administration of engaging in an “intolerable alliance” with Mexican crime groups.

President Sheinbaum rejected that “slanderous” accusation, but on Monday morning struck a softer note as she announced “a series of agreements” with Mr Trump after a conversation between the two leaders.

Meanwhile, European leaders warned that Mr Trump’s threat to expand tariffs to the European Union (EU) risked igniting a trade war that would harm consumers.

Market analysts warn that these spate of tariffs would trigger rise in domestic prices and hurt consumers.

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to stick to its policy of gradually raising oil output from April on Monday.

It also removed the US government’s Energy Information Administration (EIA) from the sources used to monitor its production and adherence to supply pacts.

OPEC+ is cutting output by 5.85 million barrels per day, equal to about 5.7 per cent of global supply, agreed in a series of steps since 2022.

At the previous ministerial gathering in December, the alliance decided to delay the start of the easing of the 2.2 million barrels per day cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026.

OPEC+ reiterated the importance of compliance with the cuts and the timely compensation for those producers who haven’t adhered to their assigned quotas.