Editor
Oil prices experienced a significant jump on Thursday as traders assessed the impact of potential tariffs on Canadian oil imports, coupled with the cancellation of Chevron’s license to operate in Venezuela. This development added to existing supply worries, pushing West Texas Intermediate crude (CL=F) up more than 2% to hover above $70 per barrel, while Brent futures (BZ=F) rose nearly 2% to trade above $73 per barrel.
As trade policy uncertainty continues to influence the oil market, President Trump’s announcement that tariffs against Mexico and Canada would take effect as scheduled on March 4 heightened concerns. The plan includes levies of 10% against Canadian petroleum imports, which analysts believe would primarily burden Canadian producers. Given their limited export alternatives, Canadian producers may absorb up to 80% of the added costs, while U.S. refiners could see reduced profit margins, potentially increasing crude input costs by 2% and U.S. gasoline prices by about $0.04 per gallon, according to JPMorgan analysts.
Earlier in the session, oil prices rose from their lowest levels of 2025 following Trump’s decision to reverse a concession agreement with Venezuela dating back to November 2022. Although Trump did not explicitly mention Chevron (CVX), the move appeared to target a concession allowing the company to produce and export Venezuelan oil despite sanctions against President Nicolas Maduro’s government. Chevron stated it is considering the implications of this announcement and operates in compliance with all laws and regulations, including the U.S. sanctions framework.
Traders also weighed the potential impact of a peace deal between Russia and Ukraine on oil prices. While the halt in Chevron’s Venezuelan operations may temporarily reduce U.S. imports, the bigger concern is whether a peace deal in Russia could lead to increased oil production. The Organization of the Petroleum Exporting Countries (OPEC) and its allies are set to add more barrels to the market in April after years of production cuts. However, Wall Street expects OPEC to delay unwinding these cuts for a fourth time, given the anticipated production growth from non-OPEC countries.
Impact On Oil Prices
The surge in oil prices highlights how trade policy uncertainty can significantly impact the global energy market. Tariffs and sanctions not only affect supply chains but also influence investor sentiment and market volatility.
Economic Implications
The broader economic implications of these developments are significant. As trade policy uncertainty continues to shape oil markets, it also affects consumer prices and economic growth. The potential for increased gasoline prices due to tariffs could further strain consumer budgets, especially in regions heavily reliant on imported oil.
Global Supply Dynamics
OPEC’s production plans remain a key factor in global oil supply dynamics. Despite expectations of increased production from non-OPEC countries, OPEC’s decisions will continue to influence oil prices. The ongoing trade policy uncertainty adds complexity to these dynamics, making it challenging to predict future price movements.
In conclusion, the recent surge in oil prices underscores the complex interplay between trade policy uncertainty, supply concerns, and global economic factors. As these elements continue to evolve, they will remain crucial in shaping the future of the oil market.
