On Tuesday, U.S. President Donald Trump announced plans to double tariffs on Canadian steel and aluminum from 25% to 50%. He stated that this decision was a response to Ontario’s proposal to impose a 25% surcharge on electricity exports to certain U.S. states. While Trump had previously delayed several tariffs on Canada and Mexico, Canada reacted strongly. The Canadian government declared on Monday that it would impose matching tariffs on $30 billion worth of U.S. goods initially, followed by an additional $125 billion in three weeks, bringing the total to $155 billion.
Meanwhile, Ontario Premier Doug Ford confirmed that the province would implement the electricity surcharge on three U.S. states starting Monday. He also warned that Ontario would cut off electricity exports entirely if the U.S. introduced further tariffs on Canadian goods.
However, the trade conflict shifted when Ontario suspended its planned electricity surcharges. In response, Trump withdrew his threat to increase tariffs on Canadian steel and aluminum.
Oil Markets React to Trade Uncertainty
The ongoing tariff disputes and uncertainty over U.S. energy and foreign policies have significantly impacted oil prices. After Trump withdrew his tariff threats, Brent crude for May delivery rose 2.1% to $70.98 per barrel by 11:50 a.m. ET on Wednesday, while WTI crude climbed 2.3% to $67.74 per barrel.
Oil prices have declined sharply over the past month. Brent crude, which reached a one-month high of $77 per barrel, settled at a six-month low of $69.28 per barrel on March 10. On March 5, it dropped to a three-year low of $68.33 per barrel. The Brent futures curve has seen declines, with the front-month contract falling $2.34 per barrel week-over-week. The most significant drop was a $2.45 per barrel decline in the August 2025 contract. Brent for five-year delivery also fell to a 20-month low of $66.37 per barrel.
Since Trump’s inauguration, Brent crude has closed lower on 20 out of 35 trading days, with a cumulative decline of $10.01 per barrel as of March 10.
Market Speculation and Risk Reduction
Analysts at Standard Chartered attribute the price downturn to worsening speculative positioning. The bank’s crude oil money-manager positioning index dropped 6.9 points week-over-week to -35.0. All major petroleum product indices, including heating oil, gasoil, and gasoline blendstock, also declined.
Despite a shift toward short positions, traders on both sides have been reducing their market exposure. Over the past week, long positions in the four primary Brent and WTI contracts dropped by 44.7 million barrels to a 12-week low of 467.5 million barrels. Short positions also declined, falling by 21.8 million barrels from the previous week’s six-month high to 249.8 million barrels.
Europe’s Gas Withdrawal Season Nears End
Europe’s gas withdrawals slowed significantly last week, signaling the approaching end of the EU’s winter gas consumption period. According to Gas Infrastructure Europe (GIE), as of March 9, European gas inventories stood at 43.04 billion cubic meters (bcm), with a weekly drawdown of 1.54 bcm. This figure represents only 59% of the five-year average and less than half the previous week’s withdrawal of 3.11 bcm.
The slowdown was particularly evident over the weekend due to mild weather. On Saturday, inventories fell by just 28 million cubic meters (mcm), while Sunday saw a decline of 32 mcm—the lowest withdrawal levels since the season began in early November. Notably, gas inventories in France and Germany actually increased on both days.
Gas Prices Drop Amid Ukraine Ceasefire
European natural gas futures fell toward €42 per megawatt-hour (MWh) on Wednesday following Ukraine’s agreement to a U.S.-proposed 30-day ceasefire with Russia. The news halted three consecutive days of price increases and raised hopes for easing geopolitical tensions and a potential boost in Russian gas supplies.
Europe has significantly reduced its dependence on Russian gas, with daily imports dropping from approximately 450 million cubic meters at the end of 2021 to around 150 million cubic meters currently. Discussions on future energy strategies were a key topic at London’s International Energy Week.
According to the Financial Times, one proposal involves U.S. companies purchasing Nord Stream 2 to act as intermediaries between Russia and European consumers. Proponents argue that this could enhance the reliability of gas flows. However, analysts at Standard Chartered caution that such a plan would require approvals from multiple jurisdictions and might not resolve supply security concerns.
Another proposal suggests resuming Russian gas imports specifically for power generation, provided that coal-fired plants could fully compensate for any future disruptions. However, Standard Chartered warns that this approach could allow Russia to manipulate European gas prices, much like it did before its invasion of eastern Ukraine. Increasing reliance on a politically unpredictable supplier could expose Europe to further energy risks.
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