Trump’s New Tariffs Boost Oil Prices Despite Potential Demand Consequences

Oil prices are climbing after Trump imposed new tariffs on steel and aluminum, even if they will likely be disruptive for global economic growth.

– Europe’s TTF natural gas benchmark rose to €59 per MWh ($19.50 per mmBtu) this week, the highest continental futures have been since February 2023 after posting four consecutive weeks of gains in 2025.

– This week’s scare has come from meteorologists as average temperatures in Northwest Europe are set to drop below 0 degrees Celsius next week, the lowest in a year, as Arctic air will be trapped over the continent by a shift in the Arctic Oscillation pattern.

– Due to a much colder winter, gas consumption across Europe is expected to increase 17% this month from a year ago, with EU gas inventories rapidly depleting and now only 48% full.

– The weakness of the euro against the US dollar (EUR/USD trading at 1.03) is aggravating the economic effects of panic LNG buying – the pace of LNG imports to Europe in February is already 20% higher than January’s average rate of 380,000 tonnes LNG per day.

Market Movers

– US oil major ExxonMobil (NYSE:XOM) is reportedly considering launching a $8.6 billion petrochemical project in Port Lavaca, Texas, mulling a steam cracker and polyethylene production units.

– London-based mining giant Anglo American (LON:AAL) is moving closer to spinning off its diamond unit De Beers, just as the government of Botswana confirmed it would be keen to increase its stake in the company from the current 15%.

– Brazil’s leading independent upstream firm Prio (BVMF:PRIO) is reportedly looking to buy Equinor’s (NYSE:EQNR) 60% stake in the offshore Peregrino field, worth some $3 billion, however the company denied any negotiations right now.

Tuesday, February 11, 2025

New week, new Trump tariffs – the momentum coming from Donald Trump’s constant threats has been a boon to oil prices, even if the price movements sometimes contradict macroeconomic assumptions. The 25% tariff on steel and aluminum could be disruptive for global economic growth, further aggravated by the threat of higher inflation keeping US interest rates unchanged for longer, but the market’s kneejerk reaction was once again bullish, sending ICE Brent back to $77 per barrel.

Trump Opens Up New Trade War Front. US President Donald Trump announced 25% tariffs on all steel and aluminum imports into the United States, coming on top of already existing duties, raising concerns that steelmakers from Brazil, Canada, and Mexico could retaliate with reciprocal steps.

Iran Vows to Defy US Pressure to Negotiate. Reacting to Trump’s pledge to exert maximum pressure on Tehran and block its 1.5 million b/d oil exports to China, Iranian foreign minister Abbas Araqchi said Iran would not negotiate under pressure, recalling the US’ abrupt 2018 JCPOA pull-out.

China Deregulates Renewable Power Pricing. China’s economic planning body NDRC announced that prices of on-grid electricity producers from renewable sources of energy will be no longer fixed and will instead be determined by the market from June 2025 onwards.

High Saudi Prices Scare Chinese Refiners. Saudi Aramco (TADAWUL:2222) is set to load 41 million barrels of crude to Chinese refiners in March, down 15% compared to this month’s nomination of 44 million barrels as Asian formula prices were hiked by $2.40-2.50 per barrel to multi-year highs.

Trade Wars Prompt Hedge Funds to Get Bearish. The emerging trade conflict between Washington and Beijing has put an end to four consecutive week-over-week increases in hedge funds’ long positions in crude oil, with net positions down by 18 million barrels in the week ending February 4.

Nippon Steel Curbs US Steel Appetite. As Japan’s Prime Minister Shigeru Ishiba visited the United States, steelmaker Nippon Steel (TYO:5401) announced it would seek an investment in US Steel (NYSE:X) instead of an outright purchase after Trump claimed no one could have a majority stake.

Chevron Offshoot to Invest into Venezuela. Amos Global Energy Management, a US upstream startup led by former Chevron E&P boss Ali Moshiri, has agreed to buy Chinese Sinopec’s oil and natural gas interests in Venezuela, eyeing potential gas exports to Trinidad and Tobago.

Activist Investor Raises Hopes of BP Revamp. UK oil major BP (NYSE:BP) reported a 35% drop in annual profits last year as it generated 8.9 billion, but the firm’s stock has been gradually increasing as reports emerged that activist investor Elliott Investment built a stake in the company.

Brazil Eyes Exploration Expansion into India. India’s state-run oil explorer Oil India (NSE:OIL) signed an agreement with Brazil’s deepwater specialist Petrobras (NYSE:PBR) to jointly bid for oil and gas exploration blocks in the South Asian country after no foreign firms bid in the 2024 licensing round.

US Refiners Bemoan Mexican Crude Quality. Mexican crude imports slumped 40% month-over-month to less than 600,000 b/d just as US Gulf Coast refiners started to shun Mexican heavy grades, with Maya cargoes reportedly having a water content of as much as 6%, six times the industry standard.

Baltic Countries Switch Away from Russian Grid. The Baltic countries of Lithuania, Latvia, and Estonia formalized their switch from Russia’s electricity grid to the European system after disconnecting from the IPS/UPS network that had been working since the Soviet times of the 1950s.

Taiwan Jumps Onto the Alaska LNG Bandwagon. Echoing Japanese politicians, Taiwan’s government has also expressed readiness and interest to participate in the 20 mtpa Alaska LNG project due to its short shipping distance, wary of Trump’s tariffs as Taipei is running a $74 billion trade deficit with the US.

Saudi Aramco Refinery Becomes US’ Largest. Saudi Aramco-owned Motiva Enterprises expanded its Port Arthur refinery in Texas to a capacity of 654,000 b/d, largely by removing operational bottlenecks, and overtook Marathon Petroleum’s Galveston Bay plant to become the largest US refinery.