On Monday, U.S. crude oil and Brent prices fell by over 1%, marking a significant downturn amid ongoing trade discussions. Energy Secretary Chris Wright announced that the United States is in "active dialogue" with Canada and Mexico to address tariff issues that have stirred uncertainty in energy markets. The U.S., known for being the largest producer of crude oil and natural gas globally, seeks to mitigate the impact of tariffs initially imposed by President Donald Trump.
Crude oil futures have experienced fluctuations as Trump's trade policies create market uncertainties. The Organization of the Petroleum Exporting Countries Plus (OPEC+) has confirmed plans to gradually increase production, adding 2.2 million barrels per day starting next month. Trump had originally imposed broad 25% tariffs on goods from Canada and Mexico, alongside a 10% tariff on Canadian energy imports. These measures have caused concern among U.S. refiners, who rely heavily on Canadian heavy crude.
Energy Secretary Wright emphasized the potential for an agreement with Canada that could prevent tariffs on gas and oil, stating it "certainly is possible," though he cautioned that "it's too early to say." Wright acknowledged the uncertainty created by these tariffs during ongoing negotiations, with many U.S. refiners dependent on Canadian imports.
"We can get to no tariffs or very low tariffs but it's got to be reciprocal," Energy Secretary Chris Wright stated.
U.S. crude oil closed at $66.03 per barrel, while Brent settled at $69.28 per barrel, reflecting market reactions to these developments. President Trump has temporarily paused tariffs on Mexican and Canadian imports compliant with the United States-Mexico-Canada Agreement until April 2. However, ambiguity persists regarding how much of the imported energy aligns with the agreement's terms.
Canada's Energy Minister Jonathan Wilkinson recently expressed concerns that full implementation of these tariffs would lead to increased energy prices in the U.S.
"We will see higher gasoline prices as a function of energy, higher electricity prices from hydroelectricity from Canada, higher home heating prices associated with natural gas that comes from Canada and higher automobile prices," Wilkinson warned.
The U.S. imported an average of 6.6 million barrels of crude oil per day in December, with more than 60% sourced from Canada according to the Energy Information Administration. This dependency underscores the critical nature of reaching a favorable agreement.