Oil Prices Drop after Trump’s Framework for Greenland Deal
Oil prices dropped on Thursday as pressure eased in the global commodity market after the US announced a framework for a Greenland deal in Davos and ‘golden dome’ talks.
Prices of crude spiked significantly with the US trade threat against major allies and the economic retaliatory plan that plunged the dollar index. The markets face imbalance between oil demand and supply.
Brent crude traded at $64.58 per barrel, down around 0.2% from the previous close of $64.70. US benchmark West Texas Intermediate (WTI) was at $60.55 per barrel, down about 0.1% compared with $60.62 in the prior session.
US President Trump said Wednesday that a framework for a deal involving Greenland and the broader Arctic region was established following his meeting with NATO Secretary General Mark Rutte in Davos, Switzerland.
“This solution, if consummated, will be a great one for the United States of America, and all NATO Nations,” Trump wrote on his Truth Social platform.
“Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st,” he added.
Trump said additional discussions are being held concerning the “Golden Dome” — a proposed US missile defense system — as it pertains to Greenland.
Last week, Trump said Washington would impose 10% tariffs on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland starting on Feb. 1, rising to 25% in June unless there is a deal for “the complete and total purchase of Greenland.”
Signals pointing to easing trade tensions and the pullback of tariff threats initially supported oil prices by reducing fears over global trade frictions. However, lingering geopolitical uncertainties in the Arctic region kept gains in check.
Markets also digested Trump’s remarks on the Fed. He said Wednesday that he was nearing the end of a search to replace Fed Chair Jerome Powell and hinted that he has largely settled on a candidate.
“I’d say we’re down to three, but we’re down to two. And I probably can tell you, we’re down to maybe one, in my mind,” he told CNBC in Davos.
Earlier in the day, Trump said he plans to soon announce the new chair of the Fed as he continued to criticize Powell in his speech at the World Economic Forum in Davos.
Trump’s continued criticism of Powell has led investors to price in the possibility of a more growth-oriented, low-interest-rate-friendly leadership at the Fed. That expectation has weighed on the dollar, offering some support to oil prices.
Still, rising concerns about the Fed’s independence and medium-term economic uncertainty have limited the upward momentum.
On the fundamentals side, the International Energy Agency slightly raised its global oil demand growth forecast. The agency revised up its outlook by 69,000 barrels per day (bpd), projecting that global oil demand will rise by about 932,000 bpd in 2026 to 104.98 million bpd, according to its January Oil Market Report.
Global oil supply, meanwhile, fell by 350,000 bpd in December to 107.41 million bpd, marking a third consecutive monthly decline and leaving output about 1.6 million bpd below the record high reached in September 2025.
While stronger demand expectations and falling supply point to a tighter global oil balance, analysts say supply levels still exceeding demand have continued to cap price gains in the near term.
Trump said on Wednesday that he had secured a “framework” deal on Greenland, including access to mineral rights for the U.S. and its European allies as well as collaboration on the Golden Dome.
The agreement appears to mark something of a climbdown for the U.S. president, who has long advocated for control of the self-governing Danish territory and previously refused to rule out the use of military force.
Denmark’s prime minister Mette Frederiksen said she had spoken to NATO’s Rutte both before and after his meeting with Trump at Davos, adding that the military alliance is “fully aware” of Copenhagen’s position.
“We can negotiate on everything political; security, investments, economy. But we cannot negotiate on our sovereignty. I have been informed that this has not been the case either,” Frederiksen said.
“The Kingdom of Denmark wishes to continue to engage in a constructive dialogue with allies on how we can strengthen security in the Arctic, including the US’s Golden Dome, provided that this is done with respect for our territorial integrity,” she added. Nigerian Top 5 Banks’ Valuation Increases to N12 Trillion
