Oil Briefly Recovers As Energy Experts Reconsider Trump's Tariff Impact

But Russia doesn't share emerging positive sentiment from Canada: File Image/Pixabay

Pundits who thought oil was in a free fall with no end in sight due to U.S. president Donald Trump's tariff initiatives reconsidered their outlook on Tuesday, as oil prices initially rose as much as 1.7 percent before continuing their downward trajectory.

As of 1713 GMT, Brent was down $1.47 at $62.74 per barrel, and West Texas Intermediate fell $1.26 to $59.44.

Canadian energy executives gathered in Toronto theorized that the plunge in oil prices over the past week may be short-lived, with Douglas Bartole, CEO of InPlay Oil Corp., stating that "I don't think it's fundamentals that we've dropped on — it's fear: it's fear of recession, it's everything else."

Dean Setoguchi, chief executive officer of natural gas pipeline company Keyera Corp., added, "What we learned from Covid is that energy demand is pretty resilient; the situation now could have had an effect on demand globally, but I don't think it's going to be super significant."

The main concern is a trade war between the U.S. and China, the latter of whom broke the trend of clamouring to negotiate a deal with Washington and instead announced counter tariffs; as a result, the U.S. tariff rate on China is set to skyrocket to 104 percent at 12:01 a.m. ET Wednesday, and Beijing has vowed to "fight to the end."

U.S. treasury secretary Scott Bessent on Tuesday told CNBC, "I think it was a big mistake, this Chinese escalation, because they're playing with a pair of twos…..we export one-fifth to them of what they export to us, so that is a losing hand for them."

The view of Canadian energy experts notwithstanding, Alex Hodes, director of market strategy at StoneX, said of the Washington/Beijing standoff, "The scenario has presented a case for a global recession, where fears of energy demand declining have emerged."

Russia's Central Bank was equally concerned about the turn of events: its governor, Elvira Nabiullina, told Russian lawmakers in parliament on Tuesday that the standoff could negatively affect the former Soviet Union's economy, noting that "If the escalation of the tariff wars continues, this usually leads to a decline in global trade and the global economy and, possibly, demand for our energy resources; therefore, there are risks here."

Russia's flagship Urals crude grade is close to the $50 per barrel threshold for the first time in nearly two years.