Oil rises as Trump pushes ahead with protectionist trade agenda

Oil drilling rigs

Oil prices rose today, Feb. 3, as the Trump administration targeted Canada, Mexico and China with additional tariffs as part of its campaign promises, threatening to disrupt US supplies of crude and refined products.

International benchmark Brent crude was trading up 1.03% at $76.45 a barrel, at 09:14 am Makkah time. West Texas Intermediate (WTI) crude rose 1.89% to $73.90 a barrel.

Trump signed an executive order on Feb. 1 imposing additional tariffs of 25% on imports from Canada and Mexico, and 10% on imports from China. Canadian oil and gas imports were targeted with a reduced tariff of 10%, while energy imports from Mexico will be subject to a 25% tariff.

According to estimates from the US Department of Energy, Mexican and Canadian oil exports to the US are equivalent to about a quarter of the inputs to the country’s refineries, Reuters reported.

Goldman Sachs analysts said in a note on Feb. 2 that the effects of this measure on global oil and gas prices will likely be limited and short-term.

The note explained that the potential decline in US imports of Canadian natural gas may be so slight that it will not lead to a significant increase in its price in the local market.

Canadian oil producers will likely bear most of the burden of the tariff increase, but American consumers will share the cost of higher refined petroleum prices.

Separately, fuel and electricity facilities in Russia were attacked by Ukrainian drones during the night hours, causing a fire at the Volgograd refinery and disrupting flights at several airports.