Recently, due to the implementation of large-scale tariff policies by US President Trump, oil prices have seen a significant increase in the short term. However, industry experts believe that this price increase is only temporary, and in the long run, oil prices may still fall. Trump has imposed significant tariffs on imported goods from Canada and Mexico, including a 25% tariff. For energy resources from Canada, only a lower tariff of 10% is levied.

According to the latest data from the US Energy Information Administration (EIA), in July 2024, the US imported a record high of 4.3 million barrels per day of crude oil from Canada. This growth is attributed to the expansion of the Trans Mountain Pipeline in Canada. Between January and October 2024, Canada accounted for 62% of all US crude oil imports, while Mexico accounted for 7%.

This change led to a 1.75% increase in the price of West Texas Intermediate (WTI) crude oil in the United States, reaching $73.8 per barrel; The price of gasoline futures in the United States has also increased, with RBOB gasoline futures rising 2.81% to $2.11 per gallon; The international Brent crude oil price rose by 0.71% to $76.21 per barrel.

Although in the short term, the rise in oil prices will lead consumers to pay more for gasoline and diesel costs, experts predict that this price increase is temporary. Andy Lipow, President of Lipow Oil Company, said, "Despite the initial rise in oil prices, if the retaliatory tariff cycle in Mexico and other countries continues, it may trigger a global economic recession, leading to a sharp drop in oil prices

It should be noted that despite the implementation of tariff policies, there has been no withdrawal of oil and gas supply from the market, but rather a redistribution of supply. Analysts believe that Mexico and Canada may shift their oil and gas exports to Europe and Asia. Meanwhile, US refineries may increase their processing of domestic crude oil and seek alternative supplies from the Middle East.

Canada is most affected

Canada and Mexico have very limited options in refining capacity and alternative export routes, so oil producers in these two countries will inevitably face enormous pressure from tariff policies. According to Saul Kavonic, the head of energy research at MST Marquee, it is expected that Canadian oil prices will experience a pullback of $3 to $4 per barrel due to the lack of other export markets.

Goldman Sachs also pointed out in the report that Canadian oil companies will be the most directly affected by tariff policies, and it is expected that this price correction may persist for a long time. Goldman Sachs believes that in the medium term, the full implementation of tariffs will have a negative impact on global GDP and further suppress oil and gas demand, leading to a further decline in oil prices.

Analysts believe that global oil prices may further decline in the next quarter, as tariffs intensify uncertainty about the demand outlook and OPEC+faces pressure from Trump to resume production increases. Trump has recently made it clear that he is calling on Saudi Arabia and OPEC to ease the pressure of rising oil prices.

Response and subsequent direction of OPEC+

OPEC+will hold a meeting to discuss current production policies. However, OPEC+did not immediately respond to Trump's request. OPEC+is currently reducing its daily production of 2.2 million barrels from the global market to curb the decline in oil prices. In December 2024, OPEC+decided to extend the production reduction policy until March 2025, and gradually lift this policy in the following year.

Analysts believe that if OPEC+continues to maintain or intensify production cuts, oil prices may face further upward pressure, but in the long run, the upward space for global oil prices will be limited due to weak demand. In addition, the global economy may be affected by tariff policies, and the decline in demand will further suppress the upward space of oil prices.

conclusion

Overall, although the rise in oil prices is directly driven by Trump's tariff policies, it may be short-term. In the long run, due to global economic uncertainty and weak demand, there is still downward pressure on oil prices. The market is paying attention to the policy trends of OPEC+and the changes in the global economy.