The newly imposed tariffs by U.S. President Donald Trump are expected to have a minimal long-term effect on global oil and gas prices. Despite the introduction of tariffs on imports from Canada, Mexico, and China, global oil demand and production are likely to remain largely unaffected. While some short-term disruptions are anticipated, the market is expected to adjust quickly, with alternative export routes for oil and natural gas helping to mitigate any significant price fluctuations.

The tariffs, which come into effect on February 4, include a 25% levy on most goods from Mexico and Canada, a 10% tariff on energy imports from Canada, and a 10% tariff on Chinese goods. Following the announcement, oil and gas prices saw a temporary spike, but the long-term price outlook remains stable. The 2025 price forecasts for Brent and WTI crude are expected to stay at $78 and $75 per barrel, respectively, with global production and demand continuing to support market stability.

Regarding natural gas, any reduction in U.S. imports from Canada—estimated at a modest 0.16 billion cubic feet per day—is unlikely to significantly impact U.S. gas prices. The scale of the reduction is too small to trigger substantial changes in the broader market. Although the tariffs will result in some decrease in cross-border energy trade, particularly in natural gas, the effect on U.S. prices will be negligible.

Canadian oil producers may face more challenges. Canadian crude is expected to be discounted by $3 to $4 per barrel due to limited alternative export markets. This discount will primarily affect Canadian producers, while U.S. consumers of refined products could see an additional $2 to $3 per barrel cost. In response, the U.S. is expected to replace these lost imports with crude from other regions, such as OPEC countries, Latin America, and Europe.

Despite these short-term market adjustments, the long-term outlook for oil and gas markets remains unchanged. Price forecasts for 2025 and 2026 are maintained, with stability in global production and demand continuing to underpin the market. The tariffs on energy imports are not expected to disrupt the overall balance of the market in the coming years.

While the tariffs may cause temporary volatility, they are expected to be short-lived, with limited long-term consequences for the global chemical and energy markets. As market fundamentals remain steady, the impact of these trade measures will likely fade over time, leaving the broader market largely unaffected.