Trump’s Reciprocal Tariffs Deadline Weakens Oil Market

Brent futures went down by 28 cents or 0.37 per cent to close at $74.49 a barrel and the US West Texas Intermediate (WTI) crude futures fell by 28 cents or 0.39 per cent to $71.20 per barrel.

The American President is set to unveil new tariffs targeting specific countries that have trade surpluses with the US on Wednesday, April 2, pledging to roll back unfair trade practices.

This could be on European Union (EU) countries or even Japan, adding volatility to this week’s trading.

According to the US government, the new duties are due to take effect immediately after President Trump announces them, while a separate 25 per cent global tariff on auto imports will take effect on April 3.

In just over 10 weeks in office, the US President has implemented new 20 per cent tariffs on all Chinese imports over fentanyl concerns and reinstated the 25 per cent tariffs on steel and aluminum, expanding them to nearly $150 billion in downstream products.

Additionally, a month-long exemption for most Canadian and Mexican goods from his 25 per cent fentanyl-related tariffs is set to expire on Wednesday.

However, President Trump’s threats to impose secondary tariffs on Russian oil and to attack Iran fueled supply worries, limited losses.

He said on Sunday he would impose secondary tariffs of 25 per cent to 50 per cent on Russian oil buyers if Russia tried to block efforts to end the war in Ukraine.

Tariffs on buyers of oil from Russia, the world’s second largest oil exporter, would disrupt global supply and hurt Russia’s biggest customers, China and India.

Mr Trump threatened Iran with similar tariffs and also with bombings if Tehran did not reach an agreement with the White House over its nuclear programme.

Also, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) began unwinding the production cuts by adding about 138,000 barrels per day from Tuesday.

Prices also found some support after Russia ordered Kazakhstan’s main oil export terminal to close two of its three moorings amid a standoff between Kazakhstan and OPEC+ over excess production.

As a result, Kazakhstan will have to start cutting oil output.

The American Petroleum Institute (API) estimated that crude oil inventories in the United States rose by 6.037 million barrels for the week ending March 28, after a 4.6 million barrel drop in the prior week.

So far this year, crude oil inventories have climbed nearly 23 million barrels.