LatAmOil: Trump’s tariff plans could reshape global oil markets

The prospect of 25% tariffs on crude imports from Canada and Mexico, as proposed by US President-elect Donald Trump, could lead to significant shifts in global oil flows. Analysts predict these measures would force Canadian and Mexican producers to cut prices and redirect supply to Asian markets, with refiners in China and India particularly poised to benefit.

The U.S. currently accounts for 61% and 56% of Canadian and Mexican oil exports, respectively, but tariffs would make these heavy, high-sulphur crude imports less competitive. Canada, which has already increased waterborne crude exports by 65% in 2024 thanks to the expanded Trans-Mountain pipeline, may face even deeper price discounts as producers seek to maintain market share. Goldman Sachs warns that such constraints could lead to revenue losses for Canadian producers unable to quickly re-route supply.

Asian refiners, equipped to process heavy crude, are likely to absorb much of this redirected oil. Recent months have seen a rise in Canadian oil shipments to Asia, with Chinese refiners testing new grades. However, Mexican exports have fallen by 21% this year, suggesting potential challenges in redirecting supply.

While European refiners might gain limited access to cheaper Mexican crude, Asia’s refining capacity and demand make it the primary alternative market. Yet, scepticism remains about whether Trump will implement the tariffs, given their potential to drive inflation and increase costs for U.S. consumers and refiners.

Should the tariffs come into effect, the move could significantly alter trade dynamics, further solidifying Asia’s role as a key player in the global energy market.

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