Oil prices remain under pressure as uncertainty grows over the impact of U.S. President Donald Trump’s proposed tariffs and energy policies on global economic growth and oil demand. Despite recent losses, Brent crude futures edged up 18 cents to $79.18 per barrel, while U.S. West Texas Intermediate (WTI) rose 14 cents to $75.58. Analysts highlight the mixed market drivers that continue to stall significant price recovery.
Tariff Concerns Weigh on Demand
Trump’s aggressive tariff proposals have added to global market anxieties. The administration’s plans include 25% tariffs on Canada and Mexico, a 10% duty on China, and new tariffs against the European Union. Trump also threatened further sanctions on Russia if it fails to negotiate peace in Ukraine. Analysts warn that these trade measures could dampen global oil demand growth by slowing economic activity across key markets.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, pointed out that the broader implications of such policies are causing mixed reactions in the oil markets. “Uncertainty around tariffs is undermining confidence and reducing momentum for crude price growth,” she said.
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U.S. Policies Signal Increased Supply
Trump’s pro-drilling stance has sparked expectations of higher U.S. crude production. On Monday, he declared a national energy emergency, granting authority to reduce environmental restrictions on energy projects. The move is expected to fast-track permits for new pipelines and transmission infrastructure, potentially increasing U.S. oil supply and exerting further pressure on prices.
Kelvin Wong, a senior market analyst at OANDA, explained the situation, saying, “The lack of clarity on trade tariff policies combined with higher U.S. crude production forecasts may lead to more volatility in oil prices.”
Rising U.S. Oil Inventories
Another factor holding back oil prices is the growth in U.S. crude inventories. Recent data from the American Petroleum Institute showed that crude stocks rose by 958,000 barrels in the week ending January 17. Gasoline and distillate inventories also climbed significantly, increasing by 3.23 million barrels and 1.88 million barrels, respectively.
The surge in inventories underscores the imbalance between supply and demand, creating downward pressure on oil prices in the short term.
Easing Geopolitical Risks
On a positive note, easing tensions in key oil-producing regions have reduced fears of supply disruptions. Geopolitical stress in Gaza, which previously heightened market concerns, has begun to subside. However, this has not been enough to offset the downward momentum caused by other factors.
Outlook for the Oil Market
With global markets grappling with trade uncertainties and increasing U.S. oil supply, analysts predict more choppy and cautious movement in oil prices. As investors await clearer policy direction from the Trump administration, the oil market is likely to remain volatile.
While geopolitical risks have eased, the combination of rising inventories and trade policy uncertainty keeps oil prices in check. Market participants will closely monitor upcoming developments to assess the long-term impact on global energy demand.
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