Oil slid ahead of the inauguration of President-elect Donald Trump, as the market braced for a period of uncertainty and turmoil at the start of his second term in the White House.
Brent crude retreated near $80, accelerating declines after the Wall Street Journal reported the incoming president will stop short of new tariffs on his first day.
Traders had been eying the risk of disruption to Canadian supplies — the largest source of US imports — after Trump previously told Alberta’s Premier that there would be no exceptions for oil in any tariffs.
Still, Trump is expected to unleash a barrage of executive orders on his first day, including invoking emergency powers in the hours after he’s sworn in as part of his plan to unleash domestic energy production, according to people familiar with the matter.
“The challenge is going to be the details, we know there’s going to be some form of tariffs including on Canada and Mexico,” Amrita Sen, director of research and co-founder of consultant Energy Aspects, said in a Bloomberg TV interview prior to the Wall Street Journal report. “That has definitely given the market a bit of pause today.”
Crude has rallied at the start of the year, after frigid weather in the Northern Hemisphere drove higher heating demand and broader US sanctions on Russia’s oil industry left customers in Asia seeking alternative supplies. Trading volumes for Monday’s session may be lower due to a federal holiday in the US.
The additional sanctions on Russia have upended tanker markets, pushed up prices of Middle Eastern crude and led to a widening gap between Brent’s two nearest contracts, known as the prompt spread. Speculators have increased their net wagers on rising prices for the global benchmark, although there’s also been a smaller buildup of short positions.
Scott Bessent, Trump’s nominee for Treasury secretary, said last week he would support dialing up measures targeting Russia’s oil industry, which would likely mean even more disruption. The President-elect’s pick for national security adviser has previously vowed “maximum pressure” on Iran.
On Monday, Russian President Vladimir Putin said Moscow is open for dialogue with the US on Ukraine.
