Oil Trims Losses as Traders Weigh Demand Impact from Tariffs

(Bloomberg) -- Oil edged higher from the lowest close in six months as the market grappled with an uncertain demand outlook following President Donald Trump’s sweeping tariffs on major US trading partners.

Brent rose toward $70 a barrel after losing more than 6% over the past four sessions, while West Texas Intermediate was near $67. Trump is delaying some levies on automakers and considering exemptions for certain agriculture products, but still moving forward with reciprocal tariffs on April 2.

Oil has tumbled since mid-January as Trump’s trade policies rattle global markets, with Canada and China responding with their own measures on US products. OPEC+ has also signaled plans to start reviving idled production in April, adding to the bearish headwinds.

“Import tariffs are ultimately inflationary and impacts consumption patterns, particularly diesel, which is strongly correlated to industrial demand,” said June Goh, a senior oil market analyst at Sparta Commodities. “The unpredictability of retaliatory and reciprocal tariffs adds further uncertainty.”

US Gulf Coast refineries are placing fewer orders for crude from Mexico, which is planning to announce its response to Trump’s tariffs on Sunday. The Canadian province of Alberta will work on building pipelines to the coast to increase oil shipments to Asia and Europe, according to its premier.

Some market watchers are starting to rethink their price forecasts. Morgan Stanley trimmed its Brent estimates through the rest of the year, and expects the benchmark to trade in the $60s during the second half.

Elsewhere, US crude inventories expanded by 3.61 million barrels last week to the highest since July 2024, according to the Energy Information Administration. That compares with a drawdown projected by the industry-funded American Petroleum Institute.

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