While recent focus has been on the potential tariffs between the US and Canada, it is the escalating trade war between the US and China that has led to fears about oil demand, pushing prices downward. Canada’s oil sector narrowly escaped a 25% tariff threat from the US, only to face a 10% tariff this past Saturday, which was later lifted temporarily for 30 days. This uncertainty has left oil sands producers grappling with emotional highs and lows throughout the week.
Almost all of Canada’s 4 million barrels per day (b/d) of oil exports go to the US, with 65% of these flowing into the Midwest. This region lacks alternative supply routes, as infrastructure along the Gulf Coast is mainly designed to export light crude barrels from the US.
Experts warn that Canadian tariffs could severely impact US gasoline markets, particularly on the Atlantic Coast. A 25% tariff would raise gasoline prices by $0.50 per gallon, bringing costs to $2.50 per gallon. In the Midwest, increased oil costs could add an additional $0.20 per gallon to gasoline prices.
Meanwhile, Mexico faces fewer barriers to bypass US sanctions. Since its exports are primarily shipped by sea, they could easily be rerouted to Asia. However, legal challenges could arise from Valero Energy’s long-term contract with Pemex.
In other industry news, Talos Energy appointed Paul Goodfellow as its new CEO. Goodfellow previously led Shell’s global deepwater division. Azerbaijan’s state oil company SOCAR has agreed to buy a 10% stake in Israel’s Tamar gas field, while US firm EOG Resources won production contracts for two offshore blocks in Trinidad and Tobago.
US-Canada Tariff Dispute Causes Short-Term Price Surge
The brief spike in oil prices following the US-Canada tariff dispute quickly faded after the 30-day delay in implementing the tariffs. Now, the market’s focus shifts to the ongoing US-China trade tensions, which are raising concerns over global oil demand. ICE Brent crude has fallen sharply to $74 per barrel, with analysts fearing that the US-China trade war could significantly hamper oil demand growth this year, which was already under strain due to weak refining margins.
Gold Prices Soar Amid Trade Uncertainty
Gold prices surged to an all-time high this week, hitting $2,830.49 per ounce during intra-day trading on Monday. This dramatic rise was driven by market uncertainty surrounding President Donald Trump’s tariffs and the growing possibility of retaliatory trade wars.
OPEC+ Changes Its Approach
In a meeting on Monday, OPEC+ decided to maintain its policy of gradually returning cut production starting in April 2025. Additionally, OPEC+ will no longer consider the US Energy Information Administration (EIA) and Rystad Energy as secondary sources for its data.
Ukraine Strikes Russian Refinery Again
Ukrainian forces have launched another attack on Russian oil infrastructure, hitting the 300,000 b/d Volgograd refinery in southern Russia. This follows last week’s strike on the Ryazan refinery. The attack also targeted a condensate splitter in Astrakhan.
Trafigura Official Sentenced for Bribery
Mike Wainwright, the former COO of Swiss-based commodity trading giant Trafigura, has been sentenced to 32 months in prison for bribing Angolan officials in exchange for oil contracts between 2009 and 2011.
Iraq Moves to Resolve Kurdish Dispute
Iraq’s parliament has approved a budget amendment that will allow the federal government to subsidize oil production for international companies operating in Iraqi Kurdistan. The amendment sets a subsidy rate of $16 per barrel, which could pave the way for the restart of Kurdish oil exports.
China Retaliates with Tariffs on US Oil
In response to President Trump’s decision to impose a 10% tariff on all Chinese products, China has levied tariffs on US coal, liquefied natural gas, and crude oil. The tariffs on coal and LNG are set at 15%, while crude oil faces a 10% tariff.
Nigeria to Enforce Domestic Supply Quotas
Nigeria’s upstream oil regulator, NUPRC, has announced that it will deny export permits for oil cargoes from producers who fail to meet local supply quotas. This move is aimed at boosting domestic refining capacity, especially with the restart of NNPC’s Port Harcourt and Warri plants.
Wright Confirmed as US Energy Secretary
Chris Wright, the former CEO of Liberty Energy, has been confirmed as the new US Secretary of Energy by a Senate vote of 59 to 38. Wright has promised to focus on expanding LNG exports and modernizing the power grid, with the department’s $50 billion budget at his disposal.
Norway’s Largest Oilfield Hit by Power Outage
Equinor’s Johan Sverdrup oilfield, Europe’s largest producing field, suffered an 8-hour power outage this week. This incident comes just two months after a similar power failure in November.
Europe Struggles to Meet Gas Storage Targets
As of February 1, Europe’s natural gas storage levels were just 53% full, slightly above the EU’s 50% target. In France, storage levels have dropped to as low as 35%, prompting concerns about the continent’s ability to meet its energy needs.
ADNOC Considers Acquisition of Nova Chemicals
The UAE’s state oil company, ADNOC, is exploring a joint acquisition of Canadian petrochemical company Nova Chemicals with Austria’s OMV. The Calgary-based company is currently owned by Mubadala, the UAE’s sovereign wealth fund.
South Korea’s Oil Prospects Show Promise
US geoscientists have identified 14 oil and gas prospects in South Korea’s East Sea, potentially containing between 0.7 and 5.2 billion barrels of oil equivalent. This discovery has sparked hopes for a breakthrough in the country’s upstream oil industry.
China Tightens Export Controls on Critical Metals
In response to US tariffs, China has imposed export restrictions on five critical metals used in defense and clean energy, including tungsten, tellurium, and molybdenum. These measures have caused prices for these metals to rise outside China.
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