Brent loses momentum amid uncertainty over tariffs

The front-month ICE Brent contract has lost $0.96/bbl on the day from Friday, to trade at $72.43/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent crude’s price found some support as expectations of a ceasefire deal between Russia and Ukraine suffered a major setback over the weekend, after a heated public row between US President Donald Trump and Ukrainian counterpart Volodymyr Zelenskyy took place at the Oval Office on Friday.

“Hopes for a Russia-Ukraine peace deal took a big step backwards after President Trump clashed with President Zelenskyy,” two analysts from ING Bank said.

Washington’s current stance on the Moscow-Kyiv conflict remains unclear, pushing the prospect of a peace deal further away compared to last week, according to market analysts. “This [row between the US and Ukraine] is altering energy-market hopes for an easing of sanctions [on Russia],” ING Bank’s analysts added.

Downward pressure:

Brent’s price lost momentum on reports that the Trump administration may impose lower than 25% tariffs on imports from Canada and Mexico.

In a recent interview with Fox News, US Commerce Secretary Howard Lutnick said that the US President will decide whether to stick to the planned 25% level. “That is a fluid situation,” Lutnick said.

The tariffs are set to come into effect tomorrow, including an extra 10% duty on Chinese imports. To clarify, the fresh China tariffs are in addition to the 10% tariff levied earlier this month.

Although these tariffs pose potential supply risks to the global oil market, analysts and market participants are more concerned about their impact on oil demand growth and the prospect of a global trade war, which could have a negative impact on the broader commodities market.

Brent crude’s price moved lower “as President Trump’s tariff threats increased concerns over the outlook for energy demand,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked. “Trump affirmed the 4 March start of levies on imports from Canada and Mexico, which are the biggest suppliers of foreign oil to the US,” he added.

By Aparupa Mazumder

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