Oil prices surged due to tariff discussions and concerns over Libyan supply disruptions. Brent crude rose to $77.49, while WTI increased to $73.77. White House spokesperson Karoline Leavitt confirmed plans for tariffs on imports from Mexico, Canada, and potentially China. Meanwhile, a group in Libya halted operations at key ports, threatening to impact over 400,000 barrels per day. Traders are wary as OPEC+ prepares for a meeting, likely maintaining current production levels despite pressure for increases.
Oil Prices Surge Amid Tariff Discussions and Libyan Supply Concerns
On Tuesday, oil prices experienced a notable increase, influenced by comments from the White House spokesperson regarding the potential implementation of tariffs. Market participants are closely monitoring developments concerning Libyan oil exports. The price of North Sea Brent crude for March delivery rose by 0.53%, reaching $77.49, while its American counterpart, West Texas Intermediate (WTI), saw a 0.82% increase, settling at $73.77. This uptick in oil prices was prompted by Karoline Leavitt’s first media briefing as the new White House spokesperson. When questioned about tariffs, which have been threatened by Donald Trump on imports from neighboring countries despite existing trade agreements, Ms. Leavitt affirmed the president’s plan to initiate these tariffs starting February 1.
Market Reactions to Libyan Supply Threats
Beginning Saturday, a substantial 25% surcharge could be imposed on goods from Mexico and Canada. Such tariffs on Canadian oil are expected to drive crude prices higher. Additionally, Leavitt indicated that China might also face repercussions from these tariffs, with Trump suggesting a 10% surcharge on Chinese imports but remaining open to negotiations. According to John Kilduff of Again Capital, the crude oil market is currently at a critical juncture, indicating that minor changes can significantly affect prices.
Earlier in the day, the situation in Libya was a major concern for traders, with potential supply disruptions looming. Reports from Bloomberg revealed that a group known as the “Oil Crescent Movement” had halted operations at two eastern ports, which collectively handle over 400,000 barrels per day. In a video released earlier this month, the group warned of further actions to obstruct production and exports unless the National Oil Corporation (NOC) relocated the headquarters of five energy companies to the Oil Crescent region. Libya’s political landscape is divided, with the UN-recognized government of Abdelhamid Dbeibah in the west and a rival authority in the east backed by Khalifa Haftar. The initial threat of supply disruptions led to a more than 1% increase in crude oil prices during the session, but prices later fell following the NOC’s announcement of a resumption of operations.
Traders remain vigilant regarding Libya, as losing this supply of nearly half a million barrels per day is not an option, according to Kilduff. He emphasizes that every barrel is crucial at this time, making prices particularly sensitive to various market factors, whether they are perceived as positive or negative. Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to convene next week for a joint ministerial monitoring committee. Analysts predict that the alliance will maintain its existing production strategy, despite calls from President Trump for Saudi Arabia and OPEC to increase production in order to lower oil prices.