Oil prices remained stable at the start of the week as traders assessed the ongoing geopolitical tensions surrounding Russia’s invasion of Ukraine and President Donald Trump’s looming tariffs on US trading partners. Brent crude hovered near $73 per barrel after experiencing its largest monthly loss since September, while West Texas Intermediate (WTI) remained below $70.
European leaders are working to form a “coalition of the willing” to support Ukraine, should any US-brokered ceasefire take place and the US scales back its involvement. Both Europe and the US have sought to penalize Russia’s oil sector through sanctions in response to its invasion, but Trump’s aggressive diplomacy with Russian President Vladimir Putin to bring an end to the conflict has disrupted long-standing international alliances.
Robert Rennie, head of commodity and carbon research at Westpac Banking Corp, stated, “The situation likely complicates the path to a universally accepted ceasefire, which could delay any moves to ease sanctions on Russia.”
As the fallout from the Ukraine conflict continues, attention is turning toward Trump’s planned tariffs on China, Mexico, and Canada, set to take effect Tuesday. While these tariffs could still be postponed, any delay is expected to be short-lived.
Trump’s threats of extensive tariffs have weighed heavily on market sentiment, contributing to the downward trend in oil prices since mid-January. Hedge funds have scaled back their net-long positions in WTI to the lowest level seen since 2010, as of February 25.
The tariffs on Canadian and Mexican oil, along with potential restrictions on Chevron Corp.’s operations in Venezuela, could jeopardize approximately 80% of US crude imports. This would increase costs for US refiners, already processing at historically high levels.
Additionally, market participants are closely monitoring China’s economic outlook ahead of its major political event this week. Thousands of delegates, including key ministry officials, will meet in Beijing on Wednesday to discuss the country’s economic policies, which may offer further insight into global oil demand trends.
Related topic:
Is Crude Oil Futures Profitable?
