Goldman Sachs: Tariffs pose limited short-term impact on global oil prices

Goldman Sachs believes that the new tariffs imposed by US President Donald Trump on Canada, Mexico, and China are likely to have a limited short-term impact on global oil and gas prices.

As a result, the bank kept its price forecasts for Brent crude unchanged for both the current and next year, at $78 and $73 per barrel, respectively, Reuters reported, citing a client note issued on Feb. 2.

The investment bank expected minimal impact on prices in the near term due to stable global production and demand.

Goldman Sachs explained that the potential decline in US natural gas imports from Canada due to these tariffs is extremely small and would not significantly raise gas prices in the US.

The bank expects Canadian oil producers will ultimately bear most of the tariff burden, which ranges from $3 to $4 per barrel for Canadian crude, given the limited alternative export markets. The remaining burden of $2 to $3 per barrel will likely fall on US consumers of refined products.

US oil imports from Mexico and Canada, transported by sea, are expected to be redirected to other markets, with the US replacing those supplies with crude from OPEC, Latin America, and refined products from Europe, the report said.

Trump imposed a 25% tariff on most imports from Mexico and Canada, a 10% tariff on energy imports from Canada, and a 10% tariff on imports from China, which will take effect on Feb. 4.

However, analysts at Goldman Sachs noted in a separate memo that the US tariffs on Mexico and Canada are expected to be short-lived.