Oil Prices Rise Amid Tariff Concerns and Weaker GDP Reports

Oil market gains: Prices rise as tariffs loom and GDP weakens. Crude oil prices rallied thanks to tariff fears on imports from Canada and Mexico, despite slowing global growth dampening demand.

Date: 31-01-2025

AI Rating: 5

Earnings Potential Affected
The report touches on multiple factors that could influence stock prices of energy companies. The mention of tariffs on Canadian and Mexican imports hints at potential crude supply disruptions, which could drive prices higher. However, the slower-than-expected GDP growth in both the US and Eurozone adds a bearish sentiment as it may lead to reduced energy demand.

Crude Oil Supply Concerns
The anticipated tariffs could significantly impact U.S. crude supply since Canada and Mexico are major oil suppliers. With over half of the U.S. crude imports sourced from Canada, the imposition of such tariffs is likely to stimulate an increase in oil prices, which might positively impact the revenues of oil producers.

Global Economic Factors
The slowing global economy, as indicated by the weaker Q4 GDP growth rates for both the U.S. (+2.3% vs. +2.6%) and Eurozone (unchanged q/q instead of expected growth), raises concerns about energy demand. This could slightly negatively affect stock prices as lower demand may lead to reduced sales for oil companies.

Geopolitical Impact
Developments in Russia due to conflict-related sanctions and damage from drone strikes are causing decreased oil exports. Continued sanctions on Russia and potential new measures against Iranian exports could tighten global supply further. This could support oil prices and positively impact companies dependent on higher oil prices.

Domestic Production Trends
The report highlights a modest decline in U.S. crude production and a drop in active oil rigs, potentially indicating lower future production levels. This situation could be supportive for prices in the long term, making energy stocks more attractive.

In summary, while immediate concerns about lower global demand may temper enthusiasm, structural elements like tariffs and geopolitical tensions can foster a support for oil prices, leading to mixed impacts on stock prices in the sector.

Stocks: XOM CVX COP OXY PSX