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Views on Trump's auto tariffs are mixed; oil prices rise on tighter supply risk

The oil prices rose on Thursday, as traders assessed the impact of President Donald Trump's new auto tariffs and concerns over tighter global supplies after U.S. threats to impose tariffs on Venezuelan oil purchasers.

Brent crude futures rose 7 cents or 0.1% to $73.86 per barrel. U.S. West Texas Intermediate Crude Futures increased 10 cents or 0.1% to $69.75 per barrel at 0406 GMT.

The price of oil rose by around 1 percent on Wednesday. This was due to government data that showed U.S. crude and fuel inventories had fallen last week and the threat from the U.S. of tariffs against nations purchasing Venezuelan crude.

The recent price increase seems to be factoring into the noise surrounding tariffs for Venezuelan oil buyers. Suvro Sarkar, DBS Bank’s energy sector lead, said that Trump’s policies towards Iran and Venezuela are the greatest upside risk to oil prices.

Reliance Industries in India, the operator of the largest refinery complex in the world, has announced that it will stop importing Venezuelan crude oil following the announcement on tariffs, according to sources.

Sarkar stated that DBS did not expect prices to return to their higher levels of early 2025, as "US tariff wars and policy uncertainty will haunt the market again at some point".

Investors and traders were also assessing how President Trump's announcement that a 25% tax would be imposed on imports of cars and light trucks starting next week could impact oil demand. It was thought that this could increase auto prices, impacting oil demand, and slowing down the transition to greener vehicles.

The news about Trump's auto tariffs could actually be a positive for crude oil, because it will slow down the transition to more fuel-efficient, newer models. This is according to Tony Sycamore, a IG market analyst.

A Dallas Fed survey found that energy executives are pessimistic regarding the outlook for the oil and gas sector. Separate Trump tariffs on aluminium and steel could increase costs of drilling and pipeline construction.

(source: Reuters)