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Oil Prices Climb on U.S. Tariff Threat Despite Weekly Decline

Market Reaction to Tariff Risks

Oil prices rose on Friday as traders assessed the potential impact of U.S. President Donald Trump’s proposed tariffs on Canada and Mexico, key crude suppliers to the U.S. Brent crude futures for March gained $0.61 to $77.48 per barrel, while the April contract rose by $0.48 to $76.37. U.S. WTI crude climbed $0.65 to $73.38 per barrel.

Despite these gains, both benchmarks are poised for weekly losses, with Brent down 1.3% and WTI falling 1.69%. For the month, however, Brent is up 3.8%—its strongest performance since June—and WTI has gained 2.3%.

Geopolitical and Policy Concerns

The tariffs, potentially targeting crude oil imports, are part of a broader strategy to pressure Canada and Mexico to curb fentanyl exports. Analysts warn of geopolitical instability, particularly with existing U.S. sanctions on Russian, Venezuelan, and Iranian oil contributing to supply risks.

“Geopolitical risks and Trump’s policies have added a premium to oil prices,” noted Daniel Hynes, an ANZ Bank analyst.

OPEC+ and Future Outlook

Eyes are on the Feb. 3 OPEC+ meeting, where potential production adjustments could be discussed in light of U.S. sanctions and rising global oil demand. Meanwhile, the Federal Reserve’s decision to maintain interest rates highlights ongoing economic uncertainty amid inflationary pressures.

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