WTI Crude Oil Rises 2% in January as Markets Eye Trump’s Tariff Threats
WTI crude oil saw a modest rebound on Friday as traders evaluated the potential impact of new U.S. tariffs on Canadian and Mexican imports.
President Donald Trump has threatened to impose a 25% tariff as early as this weekend unless both nations take stronger action against fentanyl shipments into the U.S.
The uncertainty surrounding whether crude oil will be included in these tariffs has added volatility to the market. Brent crude is set for a 1.6% weekly decline, while WTI has lost 2% for the week. However, both benchmarks are closing January in positive territory, with Brent rising 3.6%—its best month since June—and WTI climbing 2%.
Analysts warn that any tariffs on North American crude could disrupt supply chains, as Canada and Mexico collectively account for nearly 4.7 million barrels per day of U.S. crude imports.
Key Figures:
Canada’s crude exports to the U.S.: 3.9 million bpd
Mexico’s crude exports to the U.S.: 733,000 bpd
Total U.S. crude imports: 6.5 million bpd
Geopolitical Risks Keep Oil Prices Elevated
The foreign policy stance of Trump’s administration continues to keep oil markets on edge. Beyond the potential North American tariffs, the U.S. has ramped up sanctions on Russia, Venezuela, and Iran, tightening global supply and raising geopolitical risk premiums.
“Crude oil prices fluctuated as investors contemplate the likelihood of U.S. tariffs alongside a flurry of executive orders and policy announcements,” said Daniel Hynes, an analyst at ANZ Bank. He noted that restricting imports from sanctioned nations could reduce global oil supply at a time when the U.S. Strategic Petroleum Reserve (SPR) is being refilled, further supporting demand.
If oil tariffs are implemented, traders anticipate an upward shift in crude prices as refiners look for alternative sources. However, if Trump excludes Canadian and Mexican crude from tariffs, markets may see a short-term pullback in WTI prices.
Technical Outlook: WTI Crude Oil
WTI crude oil remains within a descending channel, currently trading at $73.35 after an intraday high of $73.45. Despite recent attempts to stabilize, WTI is struggling below the 50-day EMA at $74.10, indicating lingering bearish sentiment.
The pivot level at $73.02 remains a key support zone, with further downside risk toward $71.58 and $70.50 if selling pressure intensifies. A drop below these levels would reinforce the broader downtrend, possibly extending losses to $69.47.
On the upside, immediate resistance is seen at $74.25, followed by $75.57. A breakout above $74.10 could signal a trend reversal, potentially lifting WTI toward these higher resistance levels.
For now, traders should watch for price action around the 50-day EMA, as a breakout above or below this level will determine the next major move.
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