US President Donald Trump has ordered 25% tariffs on Canadian and Mexican oil imports to address a national emergency over fentanyl and illegal aliens entering the US. The tariffs, which start on Tuesday, will have varying impacts on European and Asian refineries.
The tariffs will particularly affect the heavier crude grades needed by US refineries for optimum production, potentially forcing them to cut production and increase costs for consumers. However, refiners in other markets like Europe and Asia are expected to benefit from the increased supply of cheaper oil.
Analysts predict that US diesel exports may decrease, supporting European margins, while gasoline imports could remain strong due to the US Northeast’s need for more gasoline. Asian refineries are well-positioned to take advantage of discounted Mexican and Canadian crude, potentially boosting their profit margins.
The Trans Mountain pipeline expansion in Canada is also expected to increase shipments to China, which could substitute imports from Venezuela and Saudi Arabia. Asian-Pacific refiners may exploit fuel arbitrage opportunities to the US West Coast, which could be hit by higher feedstock costs.
Some analysts warn that US refineries may pass on increased costs to consumers, leading to higher pump prices. The US is currently an exporter of diesel and importer of gasoline. The impact of the tariffs will vary depending on market conditions and refiner strategies.
Source: https://finance.yahoo.com/news/analysis-trumps-oil-tariffs-boost-004909411.html