By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices eased on Friday with U.S. President Donald Trump expected to announce new tariffs against Canada and Mexico that will begin on March 1, according to sources familiar with the planning.
Brent crude futures for March, which expire on Friday, were down 12 cents at $76.75 a barrel by 12:48 p.m. EST(1748 GMT). The more actively traded second month futures were down 45 cents, or 0.6%, at $75.45.
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U.S. West Texas Intermediate crude eased 60 cents, or 0.9%, to $72.11.
For the week, the Brent and WTI benchmarks were set for declines of 2.1% and 2.6% respectively.
Trump will include a process for Canada and Mexico to seek specific exemptions for certain imports, the sources said, adding that they did not have details on a final tariff rate.
Trump has threatened to impose a 25% tariff on Canadian and Mexican exports to the United States if those two countries do not clamp down on shipments of fentanyl and on illegal migration across U.S. borders.
Crude futures continue to drift as traders await the outcome of Trump’s tariff threats, said Dennis Kissler, senior vice president of trading at BOK Financial.
Canadian crude is used by many U.S. Midwest refineries and a curtailed flow will likely place an upward bias on fuel prices, he added.
Canada and Mexico are the two largest crude oil exporters to the United States, but it is unclear if oil would be included among the tariffs. Trump said on Thursday he would soon decide whether to exclude oil imports from the tariffs.
Tariffs would likely result in large U.S. refinery run cuts, said Energy Aspects analyst Livia Gallarati.
“Our base case has been that, if tariffs are announced, they will include a grace period for negotiations and that oil is likely eventually to be carved out from any tariffs,” Gallarati added.
U.S. refiner Phillips 66 said tariffs could lead to production cuts in the U.S. Midwest and Rocky mountain region.
Canada will respond immediately and forcefully if the United States goes ahead with a threat to impose tariffs, Prime Minister Justin Trudeau said on Friday, warning Canadians that they could be facing tough times.
The market is also awaiting the OPEC+ meeting scheduled for Monday.
OPEC+ is unlikely to alter plans to raise output gradually when it meets on Monday, delegates from the producer group told Reuters, despite Trump urging OPEC and its de facto leader, Saudi Arabia, to lower prices.
(Reporting by Arathy Somasekhar in Houston, Enes Tunagur in LondonEditing by David Goodman, Rod Nickel and Christina Fincher)
