Oil prices surged on Monday after U.S. President Donald Trump imposed tariffs on Canada, Mexico, and China, raising fears of potential supply disruptions. However, the gains were tempered by concerns over the economic impact of an escalating trade war.
Brent crude futures climbed 78 cents, or 1.03%, to $76.45 a barrel by 0933 GMT, after reaching a high of $77.34.
U.S. West Texas Intermediate (WTI) crude futures rose $1.36, or 1.88%, to $73.89, touching their highest point since January 24 at $75.18.
Trump’s broad tariffs on goods from Mexico, Canada, and China have triggered fears of a trade war that could slow global growth and reignite inflation. The tariffs, which take effect on February 4, include a 25% levy on most goods from Mexico and Canada, along with a 10% tariff on energy imports from Canada and a 10% tariff on Chinese imports.
Barclays analyst Amarpreet Singh suggested that the relatively mild approach to Canadian energy imports might reflect caution. “Tariffs on Canadian energy imports would likely disrupt domestic energy markets more than those on Mexican imports and could even undermine one of the president’s key goals—lowering energy costs,” Singh noted.
Goldman Sachs analysts expect the tariffs to have only a limited short-term effect on global oil and gas prices.
Canada and Mexico are key suppliers of crude to the U.S., together accounting for around a quarter of the oil U.S. refiners process into products like gasoline and heating oil, according to the U.S. Department of Energy. The tariffs are expected to increase costs for the heavier crude grades that U.S. refineries need to run efficiently, industry sources said.
Gasoline prices in the U.S. are likely to rise as a result of reduced crude supply to refineries and fewer imported products, according to Mukesh Sahdev at Rystad Energy.
Trump has already warned that the tariffs could lead to “short-term” pain for Americans.
U.S. gasoline futures jumped 2.5% to $2.11 a gallon, reaching their highest level since January 16 at $2.162.
“The tariffs are expected to negatively impact the global economy, tightening physical markets in the short term and driving crude prices higher,” said Ashley Kelty, analyst at Panmure Liberum.
Investors are also awaiting updates from an OPEC+ meeting on Monday, with expectations that the group will continue its plan to gradually increase oil output.
Sahdev at Rystad Energy added that if the tariffs persist, they could lead to production losses in Canada and Mexico, potentially allowing OPEC+ to unwind its output cuts.
