(Bloomberg) -- Oil surged as President Donald Trump placed hefty tariffs on a range of imports including crude from Canada and Mexico, threatening higher costs for consumers.
West Texas Intermediate, the US benchmark, rose as much as 3.7% to $75.18 a barrel, while Brent crude's gains were less pronounced, to near $76. Trump carried out his threat to impose general levies of 25% on Canada and Mexico and 10% on Chinese goods starting on Tuesday, sparking pledges of retaliation and leaving only a small window for last-minute negotiation.
Energy from Canada faces a reduced levy of 10%, which includes roughly 4 million barrels a day of crude. The US gets most of its oil imports from its northern neighbor — as well as about 500,000 barrels from Mexico. The increased cost for feedstock will likely translate to surging prices at the pump, with the most-active gasoline futures soaring as much as 5% in New York.
Crude had fallen since Trump's inauguration, with the new administration's policies threatening to disrupt global trade and growth, but still notched a modest advance last month after gains from a cold winter and US sanctions on Russian oil. Trump also flagged even wider tariffs in the coming months, including against the European Union
“Tariffs on the US' largest crude oil supplier are providing a boost to crude oil prices and in particular refined product prices,” said Warren Patterson, head of commodities strategy for ING Groep NV. “While this may be supportive in the very short term, we may not need to wait too long for a risk-off move as it raises concerns over global growth.”
The potential disruption to US oil supply saw the discount of WTI to global benchmark Brent narrow to around $3 a barrel from a low of nearly $4 last month. Traded volumes were also far above average levels in the Asian session, with about 200,000 lots of WTI across the curve trading in the first hour, or almost a fifth of Friday's total.
Prices:
WTI for March delivery advanced 1.9% to $73.92 a barrel at 8:19 a.m. in Singapore.
Brent for April settlement rose 0.8% to $76.31 a barrel.
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