Oil prices have maintained losses in recent days after remarks made by U.S. Commerce Secretary Howard Lutnick sparked fresh uncertainty in the global markets. According to Lutnick, the Trump administration might consider rolling back some tariffs imposed on Mexico and Canada, adding to the unpredictability already surrounding global trade relations.
As of the latest data, West Texas Intermediate (WTI) crude oil was hovering around $68 per barrel, reflecting a 3% drop over the past three sessions. Brent crude was priced at approximately $71 per barrel. Although Lutnick did not provide specific details on the potential tariff changes, he dismissed the idea that the levies would be entirely removed. These comments were made during an interview on Fox News.
The global oil market has been under pressure since mid-January due to ongoing trade tensions between the U.S. and other nations, primarily driven by the Trump administration’s trade policies. These policies have raised concerns about the possibility of trade wars across multiple fronts, which could ultimately impact global energy demand. As a result, traders are becoming more cautious, with oil options traders expressing the most bearish sentiment seen in five months.
One of the key concerns is the potential ripple effect of U.S. tariffs on the energy sector. Some analysts believe that the imposition of tariffs could lead to a reconfiguration of global crude oil flows, with consequences for both suppliers and consumers. For example, Mexican oil may be redirected to regions such as Asia, while Latin American oil, which remains tariff-free, could increasingly find its way into the U.S. market. Additionally, buyers of fuel on the U.S. East Coast may have to look to European suppliers to meet their needs.
In response to the ongoing uncertainty, Wayne Gordon, the regional chief investment officer at UBS Group AG in Singapore, stated that Canada is preparing for a prolonged dispute over tariffs. He warned that the real risk lies in the possibility that these tensions could drag on for an extended period, which would only add to the volatility in global oil markets.
Meanwhile, the situation in China is also contributing to global market uncertainty. The Chinese government has set a modest economic growth target of around 5% for 2025, signaling the potential for additional stimulus measures. This is expected to be a response to ongoing trade tensions with the U.S., which continue to weigh on China’s economic outlook. Premier Li Qiang made this announcement during the government’s annual work report delivered to the national parliament in Beijing.
As the situation develops, oil prices may continue to face downward pressure. Market participants are closely monitoring the unfolding trade dynamics, particularly the possibility of tariff relief or further escalation in trade conflicts. The outcome of these events will likely have a lasting impact on global oil flows and prices in the months ahead.
Conclusion
The recent uncertainty in the global oil market reflects the broader implications of U.S. trade policies, which have sparked concerns about energy demand and shifting crude oil flows. With oil prices remaining volatile, traders are adopting a more cautious stance, awaiting clarity on tariff changes and their potential impact on the market. As the trade tensions between the U.S. and other countries persist, the energy sector will continue to navigate an increasingly complex and unpredictable landscape.
