Brent crude futures fell USD 0.35, or 0.44%, to USD 79.80 a barrel by 0705 GMT. Meanwhile, the actively traded March contract for West Texas Intermediate (WTI) crude dropped USD 0.90, or 1.16%, to USD 76.49 a barrel. The U.S. oil market was closed on Monday due to a public holiday, with the February contract set to expire on Tuesday.  

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Trump refrained from implementing sweeping trade actions on his first day in office but directed federal agencies to investigate unfair trade practices. He announced plans to impose 25% tariffs on imports from Canada and Mexico starting February 1, postponing his initial plan to enact them immediately upon taking office.  

Market Reactions Mixed  

"Markets are grappling with a mixed set of signals," said Yeap Jun Rong, market strategist at IG. "The relief from delayed trade measures was quickly offset by reports of upcoming tariffs on key trading partners, which dampened risk sentiment." Tariffs on Canadian crude, nearly all of which is exported to the U.S. at discounted prices, could eventually drive oil prices higher. However, concerns about the broader economic impacts of escalating trade tensions linger.  

Traders are also weighing Trump's potential moves to hike tariffs on Chinese goods, which could impact already fragile economic conditions in China, a significant oil importer.  

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Energy Policy Shifts and Supply Dynamics
  
In his inaugural address, Trump emphasised plans to expand U.S. energy production, promising to accelerate permitting for oil, gas, and power projects. The "drill, baby, drill" strategy raised concerns about oversupply in already competitive markets.  

Additionally, Trump hinted at halting oil imports from Venezuela, the second-largest supplier to the U.S. after Canada, and announced plans to refill U.S. strategic reserves, which could bolster demand for domestic crude.  

Meanwhile, cold weather in North Dakota has curtailed crude output by 125,000-150,000 barrels per day, according to the state’s pipeline authority, adding further complexity to the market outlook.