Oil Dips As Trump Tariff Panic Takes Hold - But Mexico Gets A Reprieve

by Ship & Bunker News Team
Thursday July 31, 2025

U.S. president Donald Trump’s August 1 tariff deadline for a host of countries weighed heavily on oil traders Thursday, and uncertainty about whether deals could be struck caused crude prices to dip, albeit minimally.

Brent settled down 71 cents to $72.53 per barrel, and West Texas Intermediate settled down 74 cents to $69.26.

Washington is expected to impose additional tariffs tomorrow ranging from 30 percent to 50 percent on India, Brazil and Canada, among others; Mexico, which is also facing tariffs, was given a 90-day reprieve, but analysts worried what effect all of this would have on global economic growth if deals aren’t struck soon.

It didn’t take much for traders after that to revert to an outright bearish stance, helped along by the Energy Information Administration’s report of builds in commercial crude oil and distillates inventories last week.

Also of concern: the Organization of the Petroleum Exporting Countries (OPEC) members are scheduled to increase their crude output by 548,000 barrels per day (bpd) starting August 1, in addition to their 411, 000 bpd output increase set in July.

Frank Monkam, head of macro trading at Buffalo Bayou Commodities, regarded Thursday’s oil trading philosophically: “Investors are just being cautious not to overextend the rally until we have more clarity on: one OPEC, two Russia — through the weekend” as well as the tariff deadline.

Monkam was referring to Trump warning India on threat of penalty not to purchase energy from Russia due to its refusal to cease hostilities with Ukraine; since India is Moscow’s largest buyer, presumably it would be difficult to fill the void if India complied with the U.S., as it has indicated will be the case.

Goldman Sachs analysts wrote in a report, “Finding a replacement of Russian crude on the global market would be difficult; although the exact details of potential economic penalties remain unclear, investors focus on the risks from a potential 100 percent tariff on countries that import Russian oil.”

Still, Bloomberg pointed out that the oil market “increasingly only reacts when there is a meaningful disruption to supply….while Trump has repeatedly threatened steps that might hurt output in producer nations from Venezuela to Iran and Russia since taking office, there’s so far not been a substantial hit to global supply, even when the U.S. bombed Iran’s nuclear facilities.”