Feb 4 (Reuters) – Oil prices fell on Tuesday after U.S. President Donald Trump delayed a decision on steep tariffs for Mexico and Canada, the country’s largest foreign oil suppliers. Meanwhile, concerns over increased OPEC+ production from April added further pressure to prices.
Market Movement:
Brent crude declined 50 cents (0.7%) to $75.46 per barrel by 0432 GMT.
U.S. West Texas Intermediate (WTI) crude dropped 89 cents (1.2%) to $72.27 per barrel.
The tariff pause comes after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum agreed to tighten border enforcement in response to Trump’s demands to curb immigration and drug smuggling. This decision postpones for 30 days the imposition of a 25% tariff on Mexican imports and a 10% tariff on energy imports from Canada, which were set to take effect Tuesday.
Impact on Oil Markets:
“The dominant theme for global markets has been all about U.S. tariffs,” said Yeap Jun Rong, market strategist at IG. While the delay has improved risk sentiment and led to a softer U.S. dollar, oil prices remain under pressure, he added.
Concerns over rising OPEC+ supplies from April further weighed on oil markets. The Organization of the Petroleum Exporting Countries (OPEC) and its allies met on Monday to discuss Trump’s call for increased production but opted to stick with their gradual output-raising strategy.
Analysts at ING warned that Canada remains vulnerable to trade disputes unless it diversifies its oil export routes beyond the U.S. Expanding pipeline infrastructure to reach global markets would take years but could provide greater flexibility for Canadian producers.
Other Market Drivers:
Trump-Xi Talks: The White House confirmed that Trump is set to speak with Chinese President Xi Jinping this week, as a 10% tariff on all Chinese goods is scheduled to take effect later Tuesday.
U.S. Inventory Data: Investors await weekly U.S. crude stockpile reports for the week ending Jan. 31. Analysts polled by Reuters anticipate a 10.8 million barrel increase in crude inventories, while gasoline and distillate stockpiles are expected to decline.
Despite temporary relief from tariff concerns, the oil market remains weighed down by supply-side risks and broader macroeconomic uncertainties.
