Week in Review: OPEC+ Meeting Looms as U.S. Tariff Drama Weighs on Oil Prices

This week, oil prices dipped slightly as markets closely monitored President Donald Trump’s supposed 25% tariffs on imports from Canada and Mexico, two of the United States’ largest crude oil suppliers. On Friday, prices showed slight decreases, with WTI sitting around $72/bbl. Both Brent and WTI benchmarks are on track for weekly declines of over 2% alongside broader market uncertainty.

The White House reaffirmed that the tariffs could be avoided if Canada and Mexico address fentanyl shipments into the U.S. While it remains unclear if crude oil imports will be included in the tariffs, analysts suggest that traders have already priced the possibility into current oil values. If imposed, potential tariffs could disrupt U.S. refinery operations and trade flows, leading to price volatility. Analysts also speculate that oil may ultimately be exempted from tariffs after negotiations.

On the supply side, U.S. crude stockpiles rose by 3.5 million barrels last week, exceeding forecasts of a 3.2 million-barrel increase. This was thanks to reduced refinery output caused by severe winter storms across the U.S. Additionally, U.S. sanctions against Russia have tightened global supply, with February crude exports from Russia expected to decline by 8% as the country ramps up its refining activity.

Attention now turns to the upcoming OPEC+ ministerial meeting on February 3. The group, which includes key producers such as Saudi Arabia and Russia, will likely discuss strategies to respond to U.S. pressure for increased production. A price war between OPEC+ and the U.S. is not expected since such a move could be mutually damaging. Instead, there may be gradual adjustments to current output cuts to maintain market stability.

In a broader economic context, the U.S. reported slower GDP growth in the fourth quarter, with the economy expanding at a 2.3% annualized rate, down from 3.1% in the prior quarter. Despite this slowdown, consumer spending—a critical driver of energy demand—remained strong, growing at a 4.2% pace. The Federal Reserve responded by maintaining its benchmark interest rate and reducing the number of expected rate cuts for the year, reflecting a still-resilient economy. However, uncertainty over trade policies, including tariffs and tax reforms, continues to raise inflation concerns.

What This Means for Prices
Strong consumer spending could sustain energy demand, particularly for transportation and heating fuels, placing upward pressure on oil prices. If enacted, potential tariffs on imports may lead to supply chain disruptions and increased costs, pushing prices higher. Meanwhile, trade deficits and U.S. policies promoting energy exports could influence global supply dynamics, potentially moderating price growth.

Interest rate policies also play a role; fewer rate cuts could strengthen the U.S. dollar, making oil more expensive internationally and potentially limiting global demand. Inflationary pressures from new policies could prompt energy producers to raise prices, although a significant economic slowdown later in the year could temper demand and lead to price declines.

Prices in Review

Crude opened on Monday at $74.54 before dropping over a dollar on Tuesday. For a few days in a row, crude fluctuated within the $73/bbl range and opened at $73.20 this morning. This accounted for an overall decrease of $1.34 or 1.8%.

Diesel opened on Monday at $2.5065, its highest for the week. Diesel saw declines on Tuesday and Wednesday before climbing back up on Thursday. This morning, diesel opened at $2.4991, an overall decrease of 1 cent or 0.29%.

Gasoline opened on Monday at $2.0475, traded down on Tuesday and jumped back up in Wednesday trading. This morning, gasoline opened at $2.0570, an overall increase of 1 cent or 0.46%.