Market does not expect US import tariffs on crude oil from Canada and Mexico - Commerzbank

The postponement of US import tariffs on certain goods from Canada and Mexico granted by US President Trump at the beginning of March will end next Wednesday, Commerzbank's commodity analyst Carsten Fritsch notes.  

The postponement of US import tariffs ends next Wednesday

"If there is no further postponement, US refineries will have to pay a tariff of 10% on crude oil imports from Canada and 25% on crude oil imports from Mexico. The market apparently expects that this duty will not be introduced after all. This is the only explanation for the fact that the price discount for the Canadian oil grade WCS compared to WTI has shrunk to $12 per barrel." 

"At the beginning of March, it was still more than $15, and at the end of January, when US tariffs were first threatened, it was around $18 per barrel. According to the data provider LSEG, the price discount even fell to less than $10 this week." 

"The significant decline in the price difference could be linked to the expected loss of oil supplies from Venezuela, as Canadian oil could serve as a substitute for US refineries. However, the current low price difference only makes sense if the threatened import tariffs do not materialise."