Prices for crude West Texas Intermediate soared to about $73.00 as worries of increased supply loomed, as former President Donald Trump has warned of his intentions to enforce a 25% tariff against both Canadian and Mexican oil exported into the country due to these two countries being main sources for smuggling fentanyl, though a definite decision yet is not established. The uncertainty of the proposed tariffs, coupled with existing geopolitics, such as Russia sanctions, restrictions on Venezuelan oil, and pressure on Iran, has added volatility to the oil market. Furthermore, on February 3, traders have been on high alert as the OPEC+ meeting will discuss production policies as well as Trump’s drive for lower oil prices. Market expectations are that OPEC+ will continue to do what it is doing, and any increase in production may begin in April.
KEY LOOKOUTS
• Markets await clarity on Trump’s proposed 25% tariff on Canadian and Mexican oil, which could significantly impact U.S. crude imports and global price
• Traders expect discussions on production strategies, with potential adjustments as Trump pressures Saudi Arabia and the group to lower oil prices.
• Sanctions on Russia, Venezuela, and Iran, as well as U.S. efforts to refill the strategic petroleum reserve, could further elevate oil price volatility.
• China, the world’s largest oil importer, will respond to potential U.S. tariffs and its economic policies to influence global crude demand.
WTI crude oil prices are now experiencing increased volatility amid traders’ keen interest on important events, including another potential 25% tariff by Trump on Canadian and Mexican oil, which could interrupt imports of U.S. crude oil. The next OPEC+ meeting scheduled on February 3 is likely to discuss production strategies as pressures mount on Saudi Arabia to reduce prices. Geopolitical tensions, such as sanctions on Russia, Venezuela, and Iran, add further supply concerns, while U.S. efforts to refill the strategic petroleum reserve may boost demand. Meanwhile, China’s response to potential U.S. tariffs and its economic policies remain a critical factor in global oil market stability.
WTI crude oil prices remain volatile as markets await Trump’s decision on a 25% tariff on Canadian and Mexican oil, potentially disrupting U.S. imports. The upcoming OPEC+ meeting on February 3 and geopolitical tensions, including sanctions on Russia and Venezuela, add further uncertainty to global oil markets.
• Uncertainty looms as markets await Trump’s final decision on imposing tariffs on Canadian and Mexican oil, which could disrupt U.S. crude imports.
• WTI crude prices have risen to around $73.00 as supply disruptions and geopolitical risks weigh on the market.
• Traders expect the oil production strategy to be discussed, with Saudi Arabia being forced to lower crude prices.
• Sanctions on Russia, Venezuela, and Iran, and tensions in key oil-producing regions, continue to fuel oil market volatility.
• Reserve replenishment efforts may boost oil demand and influence global price trends.
• China, being the world’s biggest importer, will be affected by its economic policies and the possible U.S. tariffs on its imports.
• Traders are still wary as oil price movements are driven by political decisions, supply chain disruptions, and upcoming OPEC+ strategies.
WTI crude oil prices have risen to almost $73.00, driven by supply concerns following Trump’s tariff threats on Canadian and Mexican oil exports. The former US president threatened the imposition of a 25 percent tariff to counter the shipment of fentanyl and threw uncertainty on the global markets for oil. Such a move may be destabilizing to imports of crude from abroad since these are supplied mostly by Canada and Mexico. On top of all these, geopolitics remains rife with uncertainties like US sanctions against Russia, Venezuela, and Iran. Investors are also paying close attention to U.S. efforts to refill the Strategic Petroleum Reserve, which may weigh further on demand and price stability.
WTI Daily Chart
TradingView Prepared by ELLYANA
Another point of focus is OPEC+ scheduled to meet on February 3, when it is expected to deliberate on strategies for production with Trump applying pressure on Saudi Arabia to reduce oil prices. While market expectation is that OPEC+ may continue with current supply policy, any increase in production is bound to start April. Moreover, China’s actions on potential tariffs from the US and its fiscal policies will set the tone on global crude demand. With multifarious uncertainties that surround supply and demand as well as geopolitical action, traders stay cautious and will expect further turbulence in the near term.
TECHNICAL ANALYSIS
At press time, WTI crude oil has staged a short-term rebound from two days of decline and is trading around $73.00. It has been able to sustain above the previously mentioned spot support near the key level of $71.50 at the 50-day moving average line and could continue to be bullish if this support holds. The next resistance zone is seen near $74.20, but stronger resistance is pegged around $75.50. The RSI stands at levels close to 55, indicating a moderate degree of bullish momentum but still not in an overbought region. A final breakout above $74.20 can take this market higher to the resistance area at $76.00 while a fall below $71.50 opens it up for a drop toward $70.00 with increased bearish pressure in the short term. Market sentiment is subject to political risks and OPEC + decisions set to release next week.
FORECAST
If the tensions and supply concerns are maintained, WTI crude oil prices might continue the trend upward. If the price manages to break out above the strong resistance at $74.20, further upward moves are possible toward $75.50 and then to $76.00 in the near term. The more bullish oil prices would remain if OPEC+ continues with or even reduces its production levels. Moreover, any indication of the imposition of 25% tariff on Canadian and Mexican oil by Trump will also lead to supply curtailment into the U.S., thus fueling prices higher. Geopolitical tensions such as the ongoing U.S. sanctions against Russia, Venezuela, and Iran can also lead to a risk premium for crude oil, thereby propelling it upward. High demand from China and attempts to fill up the U.S. Strategic Petroleum Reserve may add fuel to the fire in WTI.
WTI crude oil prices are still at risk of the downside despite recent bullish momentum. Failure to breach the $74.20 resistance level could result in a pullback toward the $71.50 support area, which aligns with the 50-day moving average. If Trump postpones or abandons the planned tariffs on Canadian and Mexican oil, the market’s fears of supply disruptions may subside, and the price may decline. In addition, if OPEC+ decides to increase production based on the pressure from Trump towards Saudi Arabia, this could bring new supply to the market, causing prices to slump. At the slightest fall below the critical support of $71.50, bearish momentum may intensify and drive WTI to $70.00 or even $68.50. Macro factors like weaker demand coming from China or a strengthening US dollar can also send crude oil downward in the short term.
