ByIrina Slav– Mar 05, 2025, 2:20 AM CST
Crude oil prices extended their decline from Tuesday following remarks by the U.S. Commerce Secretary that some tariffs on Mexico and Canada could be rolled back, boosting uncertainty.
The news that OPEC+ had decided to go ahead with its April wind-down of production cuts also continued to weigh on prices, after plunging them lower earlier this week.
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At the time of writing, Brent crude was trading at $70.87 per barrel, with West Texas Intermediate at $67.75 per barrel, both down from opening.
The “OPEC+ decision to start increasing production again is a materially bearish development, loosening markets at a time that U.S. macro data are starting to soften,” Citi analysts said in a note quoted by Reuters. OPEC+ will boost combined production by some 138,000 bpd from April—a small portion of its total cuts that are close to a million barrels daily.
Also weighing on prices is sentiment among traders, who suspect the tariff war President Trump started against the largest trade partners of the U.S. could extend in time. “Canada is bunkering down for a fight,” a regional executive at UBS told Bloomberg. “The real risk is this thing gets drawn out,” Wayne Gordon, regional chief investment officer at the bank said.
The Trump administration imposed a 25% import levy on all Mexican imports, beginning Tuesday, along with a 25% tariff on all Canadian imports excluding energy, which got a discount of 15% for a 10% tariff rate.
Canada retaliated quickly enough. The retaliation began with 25% on $107 billion worth of American goods – starting with tariffs on $20.8 billion worth of goods immediately, and tariffs on the remaining $6.6 billion on American products in 21 days’ time, Canadian Prime Minister Justin Trudeau said Tuesday.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau also said.
GasBuddy reported later in the day that it expects prices at the pump to rise as a result of the tariff exchange.
By Irina Slav for Oilprice.com
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