Oil prices fell on Tuesday, driven by concerns of oversupply and heightened U.S. output following President Donald Trump’s declaration of a national energy emergency on his first day in office. Brent crude futures dropped 86 cents (1.1%) to $79.29 per barrel, while U.S. West Texas Intermediate (WTI) for February delivery declined $1.99 (2.6%) to $75.89 in its final trading session. The more-active March WTI contract fell 2%, settling at $75.83 per barrel.
U.S. crude production remains at record levels, and OPEC+ continues to curtail 5.86 million barrels per day. Analysts noted that demand weakness, rather than supply shortages, is the primary issue in the market. The U.S. Energy Information Administration (EIA) reinforced its outlook for declining oil prices due to strong global production growth and slower demand.
Trump’s potential 25% tariffs on Canadian and Mexican oil imports were delayed until February 1, easing immediate market concerns. Additionally, Trump indicated the U.S. might halt Venezuelan oil imports and refill the Strategic Petroleum Reserve (SPR), though analysts expect minimal impact on demand since the SPR refill rate is already maximized.
Price declines were limited by expectations of reduced Red Sea shipping disruptions. Yemen’s Houthis announced they would restrict attacks on Israel-linked vessels if the Gaza ceasefire is fully implemented.