Oil prices fell into negative territory on Wednesday after a dollar-high in trade after US President Donald Trump announced reciprocal tariffs on trading partners, raising concerns that a global trade war could reduce demand for crude.
Brent crude futures were up 46 cents, or 0.6%, at $74.95 a barrel, while U.S. West Texas Intermediate crude futures rose 51 cents, or 0.7%, to $71.71.
U.S. oil futures rose a dollar and turned negative on Wednesday afternoon during a press conference where Trump announced tariffs on trading partners including the European Union, China and South Korea.
For weeks, Trump has touted April 2 as “Liberation Day,” bringing new tariffs that could disrupt the global trading system.
A chart showing countries and tariffs that Trump showed during his announcement did not detail the tariffs on Canada and Mexico. Canada exports about 4 million barrels of its crude oil to the United States per day.
Trump’s tariff policies could fuel inflation, slow economic growth and escalate trade disputes, limiting the potential for a rebound in oil prices.
“While the rally of the past month has been halted, with Brent finding some resistance above $75, the focus is now on Trump’s tariff announcement and its potential negative impact on growth and demand by reducing supply due to sanctions,” said Ole Hansen, head of commodities strategy at Saxo Bank.
Comments from Mexico eased some concerns about a trade war between the two countries after Mexican President Claudia Sheinbaum said on Wednesday that Mexico does not plan to impose tit-for-tat tariffs on the United States.
Trump has also threatened to impose secondary tariffs on Russian oil, and on Monday he tightened sanctions on Iran as part of his administration’s “maximum pressure” campaign to cut off exports.
Adding to the complicated global supply picture, Russia, the world’s second-largest oil exporter, imposed restrictions on another major oil export route on Wednesday, suspending a berth at the Black Sea port of Novorossiysk a day after limiting loadings from a key Caspian pipeline.
Russia produces about 9 million barrels of oil a day, or less than a tenth of global output. Its ports also ship oil from neighboring Kazakhstan.
Meanwhile, investors largely ignored weak U.S. government crude inventory data on Wednesday. U.S. crude inventories posted a surprisingly large build of about 6.2 million barrels last week, Energy Information Administration data showed.
