Oil Experts On Tenterhooks As Countdown To Tariffs Nears Zero

Analysts insist the U.S. will be equally damaged by the levies: File Image/Pixabay

Oil prices on Thursday steadied after multiple sessions of losses, but the meagre gains were capped by expectations that Washington could impose 25 percent tariffs on Canada and Mexico this weekend.

"People are getting nervous," said Phil Flynn, senior market analyst with Price Futures Group Inc.

Brent settled up 29 cents at $76.87 per barrel, and West Texas Intermediate settled up 11 cents at $72.73 per barrel.

U.S. president Donald Trump told media he would decide Thursday night if oil would be a target of the tariffs he's proposing threatening to impose on Canadian goods.

He said, "Mexico and Canada have never been good to us on trade, they've treated us very unfairly on trade and we will be able to make that up very quickly because we don't need the products that they have: wehave all the oil that you need, we have all the trees you need, meaning the lumber."

Bloomberg pointed out that the levies "threaten to curtail imports of roughly 4 million barrels of Canadian oil a day: that could affect the sizeable portion of U.S. refiners that are set up to process heavy, sour Canadian crudes.

"Valero Energy Corp., the third-biggest US fuel maker by market value, expects domestic production to shrink about 10 percent if the levies are placed on oil."

Rebecca Babin, senior energy trader at CIBC Private Wealth Group, said, "Traders remain cautious about fully pricing in crude tariffs due to their potential impact on the consumer," and she added that Trump's remarks "reinforced the market's view that his administration is reluctant to see crude prices surge this early in his term."

Matthew Holmes, executive vice-president and chief of public policy at the Canadian Chamber of Commerce, called the tariffs a "lose-lose" that would first result in higher costs for Americans: "We will keep working with partners to show president Trump and Americans that this doesn't make life any more affordable; it makes life more expensive and sends our integrated businesses scrambling."

Other oil news on Thursday pertained to the U.S. sanctions against Russia, which reportedly caused open interest on the Brent-Dubai contract to surge to an all-time high of 448,000 contracts, indicating that many buyers who once relied on Russian oil are turning to the Middle East.

As a result, Middle Eastern oil prices are climbing faster than crude from other regions, and refiners in Europe who typically bought oil from the North Sea or Kazakhstan are seeing their supplies rerouted to Asia instead.