Oil Prices Retreated Below $80 over U.S Tariff Threats

Oil Prices Retreated Below $80 over U.S Tariff Threats

Oil prices have retreated below $80 per barrel in the global commodity market after U.S President Donald Trump declared national emergency on energy. The international benchmark Brent crude fell by 0.6%. The US benchmark West Texas Intermediate (WTI) decreased by 0.8%, reaching $75.34 per barrel, compared to its prior session close of $75.94.

Trump’s policies to boost US oil and gas production in line with his campaign promises have reinforced the perception that there will be no significant supply disruptions in global markets, thereby contributing to the downward pressure on oil prices.

Trump’s decision to revoke the executive order issued by former President Joe Biden, which banned oil and natural gas drilling in most US federal waters, is seen as a signal that Biden’s environmental regulations are being rolled back.

This reversal has eased supply concerns among market participants, contributing further price falls. Furthermore, the Trump administration’s consideration of imposing a 25% tariff on oil imports from Canada and Mexico, along with the February 1 deadline for a 10% tariff on imports from China, is also supporting downward price movements.

The anticipation that these trade measures could drive up domestic oil prices in the US, the world’s largest oil consumer, is intensifying fears of a potential decline in oil demand, adding further downward pressure on prices.

On the other hand, forecasts of rising heating fuel demand due to cold weather in both Europe and the US are providing support to prices, preventing them from falling further.

Reports of severe winter conditions in the US are causing daily oil production in North Dakota to drop by between 130,000 and 160,000 barrels, fuelling supply concerns and exerting upward pressure on prices. The oil market’s attention is slowly turning away from US sanctions against Russia towards President Trump’s potential trade policy, ING commodities strategists said in a note.

The president has reiterated his threats to impose a 25% tariff on imports from Canada and Mexico, potentially by 1 February. Overnight, he also threatened 10% tariffs on China in retaliation to fentanyl flows from the country, which has kept some pressure on oil prices in early morning trading in Asia today.

Analysts said trade and tariff risks and the potential for retaliation are growing. The European natural gas market surged higher yesterday with TTF settling more than 4.5% higher on the day and above EUR50/MWh—the highest level since the first trading day of 2025.

The catalyst for the move appears to be an outage at the Freeport LNG export terminal in the US, ING analysts said. The facility is noted to have been dealing with power issues which coincide with the freezing weather conditions the region is currently experiencing.

Freeport, which has a capacity of a little more than 20bcm, said the plant will remain shut until power to the plant stabilises. Europe needs to pull in more LNG this winter with the loss of Russian pipeline flows through Ukraine, along with also stronger demand, ING said.

EU gas storage has now fallen to 59%, and the region will need to try to make sure it stays above the European Commission’s target of 50% full by 1 February.  In addition, Germany is potentially looking at subsidising the refill of gas storage ahead of the 2025/26 winter. Naira Struggles to Keep Value as FX Pressures Mount