Oil prices ticked higher on Tuesday as markets absorbed the latest round of U.S. tariffs, with Washington imposing a 25% levy on all steel and aluminium imports. The move, aimed at supporting domestic industries, raised fears of an economic slowdown that could weigh on global energy demand.
By 3:00 pm AEDT (4:00 am GMT), Brent crude futures edged up $0.20 or 0.3%, to $76.07 a barrel, while U.S. West Texas Intermediate (WTI) crude for April gained $0.14 or 0.2%, to $72.15.
President Donald Trump’s decision to enforce the tariffs “without exceptions or exemptions” is expected to affect millions of tons of imported steel and aluminium from key suppliers, including Canada, Brazil, Mexico, and South Korea.
The trade measure heightens concerns about a broader economic impact, as tariffs tend to slow industrial activity and could weaken oil demand.
Adding to market unease, Trump recently postponed a 25% duty on Mexican and Canadian imports, as well as a 10% tariff on Canadian crude, until March 1, pending further negotiations.
Meanwhile, the U.S. has introduced additional 10% tariffs on Chinese goods, prompting Beijing to retaliate with its own levies, including a 10% duty on US crude imports.
In the energy sector, preliminary data suggested a rise in U.S. crude oil and gasoline stockpiles last week, while distillate inventories likely declined. Investors awaited reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) for confirmation.
Meanwhile, Morgan Stanley analysts noted that U.S. trade policies, combined with its commitment to enforcing tougher sanctions on Iran, could disrupt demand in oil-intensive sectors. The bank suggested that ongoing economic uncertainty might prompt OPEC+ nations to extend current production cuts.
"Over just the last five weeks, oil market participants have had to deal with new sanctions on Russia's oil industry, tariffs on Mexico and Canada - which were quickly suspended - additional tariffs and counter-tariffs on China, and more sanctions on Iran, including a return to the 'maximum pressure campaign' with the stated aim of 'driving Iran's oil exports to zero'," Morgan Stanley stated in a client note.
The investment bank warned that escalating trade disputes could disproportionately impact oil-reliant industries, dampening global demand and influencing market stability in the months ahead.
