Oil prices declined on Tuesday as investors evaluated U.S. President Donald Trump's delayed implementation of new tariffs and his intention to increase oil and gas production in the United States. Brent crude futures dropped by $1.42 to $78.73 per barrel, while U.S. West Texas Intermediate crude futures fell by $1.97 to $75.91. The absence of trading in the U.S. market on Monday was due to a public holiday.
The strengthening U.S. dollar on Tuesday led to downward pressure on prices, as it makes oil more costly for holders of other currencies. PVM analyst Tamas Varga explained that the current market weakness is likely influenced by factors related to Trump and the dollar.
After Trump mentioned the potential imposition of tariffs on Mexico and Canada, the dollar rebounded, negatively affecting oil prices. Raising concerns, Yeap Jun Rong, market strategist at IG, highlighted the shift in market sentiment following news of the proposed tariffs.
Despite refraining from immediate trade actions after his inauguration, Trump indicated the initiation of investigations into unfair trade practices by other countries. Additionally, there were mentions of possibly discontinuing oil trade with Venezuela, a significant supplier to the U.S., and the replenishing of strategic reserves to potentially increase demand for U.S. crude oil.
Further influencing prices on Tuesday was the nearing resolution of shipping disruptions in the Red Sea initiated by Yemen's Houthis. Anticipating the reopening of the Suez Canal, Saxo Bank analyst Ole Hansen noted that this could lead to a temporary surplus of supply, exerting downward pressure on prices in the short term.