Tsvetana Paraskova
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
By Tsvetana Paraskova – Feb 03, 2025, 5:13 AM CST
International oil and gas prices will see a limited short-term impact from President Trump’s new tariffs on Canada, Mexico, and China, according to Goldman Sachs.
On Saturday, the U.S. Administration announced that additional tariffs would be implemented on February 4 on these countries. Canada and Mexico face 25% tariffs, with Canadian energy slapped with a lower, 10%, tariff. China, for its part, faces an additional 10% tariff across the board.
Despite President Trump’s move, Goldman Sachs kept its oil price forecasts for this year and next unchanged, as it expects minimal impact on global oil prices in the immediate term due to stable oil supply. Moreover, Canadian tariffs have mostly been priced in already, the investment bank said in a note carried by Reuters.
However, Goldman Sachs expects near-term pain for gasoline prices, especially in the U.S. Midwest, where many refineries rely on Canadian crude.
“Canadian oil producers are expected to eventually bear most of the burden of the tariff with a $3 to $4 a barrel wider-than-normal discount on Canadian crude given limited alternative export markets, with U.S. consumers of refined products bearing the remaining $2 to $3 a barrel burden,” the Wall Street bank said.
“Canadian oil tariffs would risk unpopular, if temporary, gasoline price increases in the US Midwest,” Goldman Sachs analysts wrote in a recent note quoted by Bloomberg.
Following the tariff announcement, oil prices jumped in Asian trade on Monday.
But this kneejerk reaction in the near term could turn into much lower oil prices in the medium term if full-blown trade wars depress economies, analysts say.
“While the initial move on crude oil is upward, a cycle of tariffs and retaliatory actions by Canada, Mexico, China and perhaps others in the future could lead to a worldwide recession, causing oil prices to plummet,” Andy Lipow, President of Lipow Oil Associates told CNBC, commenting on the opening salvo in what could be a new trade war.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana Paraskova
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.