Crude oil futures decline as Colombia reacts to tariff threats by US
February crude oil futures were trading at ₹6,413 on the Multi Commodity Exchange in early trading on Monday, against the previous close of ₹6427, down by 0.22 per cent
Crude oil futures traded lower on Monday morning after the US threatened to impose tariffs and sanctions on Colombia after it refused to accept military deportation flights from the US.
At 9.53 am on Monday, April Brent oil futures were at $76.98, down by 0.74 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $74.11, down by 0.74 per cent.
February crude oil futures were trading at ₹6,413 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Monday, against the previous close of ₹6427, down by 0.22 per cent, and March futures were trading at ₹6377 against the previous close of ₹6389, down by 0.19 per cent.
On Sunday, US President Donald Trump threatened to impose tariffs and sanctions on Colombia after it refused to allow the US military flights. These flights were carrying migrants, who were being deported from the US.
In their Commodities Feed for Monday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices saw their first weekly decline of the year with ICE Brent settling a little more than 2.8 per cent lower last week. And this downward pressure has continued in early morning trading on Monday.
Stating that the tariff story has become an increasing concern for the market, they said this is particularly the case after the Trump administration imposed 25 per cent tariffs on Colombia, which is set to increase to 50 per cent in a week after Colombia refused entry to two US military planes attempting to deport illegal immigrants.
The Colombian government has retaliated with the president ordering similar tariffs of 25 per cent. Colombia is the fourth largest supplier of crude oil to the US, exporting a little more than 200,000 barrels a day. Colombia’s key export grades are heavier crudes, and so refiners in the US Gulf Coast will either have to find alternatives or face higher costs. The dollar strength following this escalation will also be providing headwinds to oil and the broader commodities complex, they said.
Meanwhile, the latest manufacturing data from China showed a decline in that country. According to the National Bureau of Statistics of China, the Manufacturing PMI in that country declined to 49.1 in January 2025 against 50.1 in December 2024. This was the first contraction in manufacturing activity since September.
China is a major consumer of crude oil in the world market. Market players feel that a decline in manufacturing activities in that country may impact the demand for commodities such as crude oil.
On Friday, Trump once again asked the OPEC (Organization of the Petroleum Exporting Countries) to reduce oil prices to put pressure on Russia’s finances.
Addressing a panel at the World Economic Forum in Davos on Friday, the Economy Minister of Saudi Arabia, Faisal al-Ibrahim, said: “The kingdom’s position, OPEC’s position, is all about long-term market stability to make sure that there’s enough supply for the growing demand.”
ING Think’s Commodities Feed noted that tanker rates appear to be coming off from their recent highs following the announcement of sanctions against Russia, suggesting that Russian oil is still flowing through the use of Russia’s shadow tanker fleet, despite a large share of this fleet being sanctioned.
February natural gas futures were trading at ₹286.90 on MCX during the initial hour of trading on Monday against the previous close of ₹295.60, down by 2.94 per cent.
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