Brent moves lower as tariff uncertainty lingers

The front-month ICE Brent contract has shed $0.24/bbl on the day, to trade at $79.06/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

A set of stringent sanctions imposed by the US against Russia’s oil industry has continued to lend some support to Brent futures.

The recently departed Joe Biden's administration announced sweeping sanctions against Russia’s energy sector, targeting oil companies, tankers, insurers, traders, etc.

“Crude oil prices continued their volatile performance as traders try to assess the fallout from recent US actions on Russia,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

On the demand front, the extreme cold weather in the Northern Hemisphere has boosted oil demand growth. Cold weather typically boosts oil demand because it increases the need for heating purposes.

“Oil prices have had a strong start to the year on the back of stricter US sanctions against the Russian energy sector and colder weather supporting demand in parts of the Northern Hemisphere,” ING Bank’s head of commodities strategy Warren Patterson commented.

Downward pressure:

Brent’s price has declined as uncertainties over US President Donald Trump’s tariff threats have weighed on global financial markets. Trump has warned of imposing 25% tariffs on all imports from Canada and Mexico from 1 February.

Additionally, some demand growth concerns resurfaced in the global oil market after the American Petroleum Institute (API) reported an increase of 1 million bbls in US crude oil stocks for the week ending 17 January.

“The API reporting another weekly rise in crude and fuel stocks, also weighed on [oil] prices,” analysts from Saxo Bank said.

Crude oil prices are poised to move lower this year due to additional output from the US, with more drilling in the Trump 2.0 era, market analysts have projected.

Oil futures decreased, "with traders recalibrating their expectations for crude supplies following President Donald Trump's pledge to amplify the US's already record-high crude output,” SPI Asset Management managing partner Stephen Innes said.

By Aparupa Mazumder

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