Crude Oil Prices Brace For Volatility Amid Trump's Policy Positions -- BMI
KUALA LUMPUR, Feb 6 (Bernama) -- BMI, a Fitch Solutions company, is expecting significant volatility in crude oil prices in the coming weeks and months as markets scramble to weigh the impact of United States (US) President Donald Trump’s new policy positions, not least regarding tariff measures.
It said that after rallying into the new year, crude oil prices declined sharply during Trump’s first few weeks in office.
“Front-month Brent crude is currently trading below US$76 per barrel, having lost more than seven per cent of its value from its year-to-date high of US$82 per barrel at the Jan 15 close,” BMI said in a statement today.
BMI said that while some tariff measures could put upward pressure on oil prices, the net impact will likely be bearish, given their potentially adverse effects on the global economy and Trump’s proven willingness to limit the impact on supply.
“Investors will have to balance the price impact of tariffs against the implications of a more hawkish approach to sanctions enforcement, with Trump recently signing a memorandum restoring his maximum pressure campaign against Iran,” it said.
Meanwhile, BMI maintained its view on Brent crude prices to average US$76 per barrel in 2025, down from US$80 per barrel.
“Our fundamental views are largely unchanged from last month’s oil price piece and, in this analysis, we will limit ourselves to a discussion of the evolving landscape for oil-related US sanctions and tariffs,” it added.
Recently, Trump announced sweeping 25 per cent tariffs on Mexico and Canada and 10 per cent tariffs on China. However, on Feb 3, 2025, the US president announced that the tariffs on Mexico and Canada would be suspended for one month, pending further negotiations.
According to BMI, the reasons behind the suspension are not entirely clear, yet it is possible that the initial announcements were intended to ‘shock and awe’ major trade partners of the US, signalling Trump’s willingness to engage in an all-out trade war in pursuit of his objectives.
-- BERNAMA