U.S. Tariffs: President Donald Trump's 25% tariffs on imports from Mexico and Canada, along with a 20% increase in tariffs on Chinese goods, took effect on Tuesday, sparking trade conflicts with the U.S.'s top three trading partners. These measures, aimed at combating the flow of fentanyl into the U.S., impact nearly $2.2 trillion in annual trade. China immediately retaliated with 10%-15% tariffs on U.S. imports and new export restrictions, while Canada and Mexico prepared to counter with tariffs of their own. Canadian Prime Minister Justin Trudeau announced 25% tariffs on $20.7 billion of U.S. imports and warned of further action if the tariffs remained. Mexico's response was expected soon, and the European Union expressed concerns over the disruption to global trade. The new 20% tariff on Chinese goods adds to previous tariffs imposed during Trump's first term, affecting a wide range of U.S. consumer electronics and agricultural imports. China responded by placing 25 U.S. firms under export restrictions and challenging the U.S. tariffs at the World Trade Organization. The tariffs could lead to economic consequences for the highly integrated North American economy, including job losses and recession fears. Financial markets reacted negatively, with global stocks falling and the Canadian dollar and Mexican peso weakening against the U.S. dollar.

OPEC+: OPEC+ has decided to proceed with a planned oil output increase of 138,000 barrels per day starting in April, marking the first increase since 2022. The decision follows pressure from U.S. President Donald Trump to lower oil prices. Oil prices recently fluctuated between $70-$82 per barrel, influenced by factors like U.S. sanctions on Russia, Iran, and Venezuela, as well as potential U.S. tariffs on China. OPEC+ has been reducing output by 5.85 million barrels per day to stabilize the market, with cuts extended through the first quarter of2025. The increase could be adjusted or paused depending on market conditions, maintaining flexibility for OPEC+ in response to changing factors.

Oil Imports: Oil being added back to the market is 138,000 barrels per day from OPEC+, which isn't enough to meaningfully influence the global supply however affects investor sentiment. In Asia, oil imports dropped by 780,000 barrels per day in early 2025 compared to the same period last year, reflecting weaker demand. Imports in the Middle East and Africa region also fell sharply, dropping from 12.8 million barrels per day to 9.1 million in February. U.S. crude imports decreased by 8%, falling to 5.82 million barrels per day. Investor sentiment remains bearish, as money managers cut their long positions in U.S. crude futures to the lowest level since December 2023.

Market Overview: The energy sector saw Crude Oil, HO, and RBOB all finish bearish at close yesterday as investors wait for the tariffs to be put in place. Reports of OPEC+ adding additional barrels of crude has news articles blasting all over the internet, however that will have very little or any impact on global supply. This morning investors are waiting to react due to the decision to pause U.S. Military Aid to Ukraine and the U.S. tariffs on Canada, Mexico, and China, and how will the market respond. Energy futures started out with minimal moves this morning as crude oil is down $0.86 to $67.51, HO is up $0.0125 to $2.2729, and RBOB is down $0.0063 to $2.1815.

In 2026, U.S. inventories of motor gasoline, distillate fuel oil, and jet fuel are expected to reach their lowest levels since 2000, largely due to two refinery closures and growing consumption. This decline in inventories is forecasted to result in increased wholesale and retail fuel prices as market participants compete for limited refinery production. Despite wider wholesale margins, falling crude oil prices may offset some of the price increases, particularly for retail gasoline. U.S. motor gasoline consumption is projected to decrease by about 1% in 2026, following no significant change in 2025. Smaller gasoline inventories and reduced production are linked to this decrease in consumption, driven by improved automobile efficiency and slower employment growth. Days of supply for motor gasoline are expected to stay near historical averages.

Early this morning the energy complex saw a slow start as traders were trying to predict what the consequence's of the new tariffs would do the market. President Trump has implemented tariffs on imports from China of 20%, Mexico a 25% tariff, and Canada a 25% tariff, with energy imports at 10%, which could hurt demand and result in more domestic product purchases. Ukrainian President Zelensky expressed regret over last week's skirmish with President Trump in the Oval Office and is prepared to resolve the issue. Zelensky also stated that he is ready to negotiate a deal giving the U.S. access to Ukrainian minerals, offering to sign at any time. At the end of today crude oil is down $0.11 to $68.26 a barrel, HO up to $2.2872, and RBOB up ending at $2.1942.