Oil Prices Climb Amid Tariff Concerns and Russian Supply Issues

Oil prices are rising as tariffs loom over Canadian and Mexican goods. The recovering crude and gasoline prices show potential, despite fears of slowing global economic growth affecting demand.

Date: 31-01-2025

AI Rating: 6

Market Reactions

Crude oil and gasoline prices experienced moderate increases today, recovering from early losses amid several supportive factors and concerns about tariffs on goods from Canada and Mexico. Tariffs could significantly impact the supply of crude oil to the U.S., as these two countries are the largest exporters of crude to the U.S.

Despite these increases, there are fears of softer crude oil demand due to disappointing global GDP growth rates. The U.S. Q4 GDP growth of 2.3% fell short of expectations (2.6%), and the Eurozone GDP did not improve, showing unchanged growth q/q. Such indicators may deter further price increases and affect investor sentiment.

Supply Factors

The global crude oil supply faces interruptions, particularly from Russia, which is experiencing a decline in crude exports due to the ongoing conflict with Ukraine. Russian exports decreased by 260,000 bpd recently, indicating a supportive factor for remaining prices. Additionally, the current sanctions on Russian oil could further limit global supplies, contributing positively to price support.

OPEC Decisions

OPEC+ is also a crucial player, as they recently decided to delay a planned increase in production. Adjustments to their output cut plans not only keep the supply tight but also suggest that they remain cautious in response to the evolving geopolitical situation. This decision is crucial for maintaining raised prices in the market.

Demand Concerns

On the flip side, there are bearish factors, such as the report of a 1.9% decline in crude imports from China—an essential factor considering China’s role as the world’s largest crude importer.

Conclusion

The market is reacting to complex signals, with potential tariff impacts supporting price recoveries while global demand uncertainties temper optimism. Overall, the outlook for crude and gasoline prices remains nuanced and heavily influenced by ongoing geopolitical developments and economic indicators.

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