Oil Falls After Trump Delays Canada, Mexico Tariffs by a Month

(Bloomberg) -- Oil declined after President Donald Trump delayed the start of tariffs against the US’s two biggest foreign suppliers of crude by a month.

Brent crude fell toward $75 a barrel, erasing all of Monday’s gains, while West Texas Intermediate was near $72. Trump pushed back planned levies on Canada and Mexico after the nations agreed to take tougher measures to combat migration and drug trafficking.

Tariffs of 10% are still set to be imposed on China around midnight New York time, but Trump said his administration plans to speak to Beijing, raising the possibility of a potential reprieve. China’s reaction to Trump’s initial announcement — coming in the middle of a weeklong Lunar New Year holiday — has been relatively muted so far.

“The volatility in the oil market is a reflection of the policy uncertainty that the new Trump administration brings,” said Charu Chanana, chief investment strategist for Saxo Markets Pte in Singapore. “Oil’s fundamentals are being overshadowed as the market is largely sentiment-driven, with tariffs playing a significant role in shaping price direction.”

Futures have faced a bumpy start to the year, first rising on a cold winter and US sanctions on Russian energy flows, before paring those gains after Trump took office and threatened blanket tariffs that could hamper global growth. Demand concerns remain pertinent, with top crude importer China’s manufacturing activity unexpectedly declining for a second month in January.

OPEC and its allies, meanwhile, didn’t make any changes to existing oil-production plans at a review meeting on Monday, even as the US president called on the group to lower crude prices by expanding output. OPEC+ is set to maintain production curbs this quarter, then gradually increase output in monthly tranches from April.

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