Oil Swings as Trump’s Tariff Whiplash Keeps Markets Off Balance

(Bloomberg) -- Oil swung as conflicting messages about the timing and scope of US tariffs on Canada and Mexico roiled global markets.  

West Texas Intermediate rose to top $73 a barrel after White House press secretary Karoline Leavitt reiterated that the planned tariffs on Canada, Mexico and China will start as soon as Feb. 1. Crude had earlier declined as much as 1.1% after Reuters reported the measures would be delayed until March 1 and may allow for exemptions, assuaging concerns about supply disruptions.

“I saw that report, and it is false,” Leavitt told reporters on Friday during the press briefing. “I was just with the President in the Oval Office, and I can confirm that tomorrow the Feb. 1 deadline that President Trump put into place” remains, she added.

The inclusion of crude in the tariffs would risk major reverberations across the oil market. Canada ships about 4 million barrels a day to the US, and the countries’ energy markets are closely integrated, with refiners in the Midwest the most vulnerable to disruptions. 

Valero Energy Corp., the third-biggest US fuelmaker by market value, expects processors to cut production if tariffs hit oil imports. Canadian crude prices have been volatile in the weeks since the tariffs were first floated, while premiums for gasoline and diesel have risen in recent days. 

“The inclusion of Canada oil in a 25% tariff on Canada and Mexico would likely initially raise gasoline prices in the US Midwest, and eventually weigh on crude prices globally (via weaker demand) and especially in Canada, where producers have limited export options,” Goldman Sachs Group Inc. analysts including Daan Struyven said in a note. 

Crude is up slightly in January after gains triggered by US sanctions on Russia and cold weather have been undercut by Trump’s planned tariffs and his calls on OPEC to lower crude prices by increasing production. 

Traders expect the group to stick with its current plan to gradually add supply only from April at a review meeting next week.

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