WTI crude oil futures climbed to around $73.7 per barrel on Monday following U.S. President Donald Trump’s announcement of new tariffs targeting Canada, Mexico, and China.

The U.S. imposed a 25% tariff on imports from Canada and Mexico, alongside a 10% levy on Chinese goods, effective Tuesday. These measures heightened fears of potential supply disruptions, particularly for Canadian energy exports, which face an additional 10% tariff.

In retaliation, both Canada and Mexico announced plans for reciprocal tariffs on U.S. goods, while China intends to file a lawsuit with the World Trade Organization. The escalating trade tensions are stoking uncertainty in the energy markets, raising questions about how global supply chains will adapt amid shifting trade dynamics.

Tariffs Impact on Oil Prices

Trade tariffs can significantly affect oil prices by influencing both supply and demand dynamics. On the supply side, tariffs on Canadian energy exports could disrupt North American crude flows, tightening regional supply. Conversely, reduced economic activity from trade disputes may dampen global oil demand, applying downward pressure on prices.

Key Effects of Tariffs on Oil Prices:

• Supply Risks: Tariffs may hinder cross-border energy trade, especially from Canada.

• Demand Slowdown: Broader trade wars can slow economic growth, reducing oil consumption.

• Currency Fluctuations: Tariff tensions often boost the U.S. dollar, making oil pricier for foreign buyers.

While supply risks could support prices in the short term, prolonged trade conflicts may overshadow this effect by curbing energy demand globally.

Technical Outlook: Bullish Shift?

Technically, WTI crude oil has broken above its descending channel, signaling a potential reversal in momentum. The price surged past the $74.72 resistance but faced immediate selling pressure, retreating slightly to $73.88. A breakout above the 50-period Exponential Moving Average (EMA) at $73.31 suggests strengthening bullish sentiment.

Immediate resistance lies at $74.72, with further upside potential toward $75.95 and $77.15 if buyers regain control. On the downside, key support levels are seen at $73.47 and $72.00. A sustained break below these levels could expose crude to deeper losses near $71.16.

In conclusion, while WTI crude faces upward momentum due to tariff-driven supply concerns, the broader economic implications of escalating trade tensions could cap gains, making the technical landscape critical for traders to watch.