Oil Prices Struggle Amid Global Tensions, Libyan Protests, and U.S. Tariff Threats

Oil prices remained subdued on Wednesday following a sharp increase on Tuesday when protesters in Libya threatened to block crude oil exports via two key terminals in the Oil Crescent. However, after discussions with the National Oil Corporation (NOC), the protestors withdrew their threat, and oil exports were reported to continue at normal rates, alleviating some concerns.

The ongoing volatility in the oil market also stems from the looming threat of U.S. tariffs on Canada and Mexico. U.S. President Donald Trump has reiterated his plan to impose a 25% tariff on goods imported from these neighboring countries, including crude oil, as a response to issues related to immigration and drug smuggling. This potential move could increase crude oil prices, particularly concerning given Canada is the largest supplier of imported crude to the U.S. The tariff is set to take effect on February 1st, but its implications remain unclear, with critics warning that it could drive up fuel costs in the U.S.

At the time of writing, Brent crude was trading at $77.29 per barrel, while West Texas Intermediate (WTI) stood at $73.61 per barrel.

Weak Earnings Expected for Major Oil Companies

In addition to geopolitical risks, oil prices are also influenced by financial results from the world’s largest oil and gas companies. According to analysts, the five biggest international oil and gas majors—ExxonMobil, Chevron, BP, Shell, and TotalEnergies—are expected to report their lowest quarterly earnings in three years, reflecting lower oil and gas prices, weaker oil trading, and declining refining margins.

BP has already warned that its fourth-quarter earnings would be negatively affected by weaker refining margins, while Shell expects lower results from its LNG and oil trading businesses. ExxonMobil has also flagged a profit drop, largely due to weaker refining margins.

Ukraine Targets Russian Refineries with Drone Strikes

On the geopolitical front, Ukraine's ongoing conflict with Russia has escalated, with Ukrainian drones hitting a major oil refinery near Nizhny Novgorod in western Russia on Tuesday. The attack on Lukoil’s Norsi refinery in Kstovo caused a large fire and significant damage, marking the second strike on a Russian oil refinery in less than a week. Ukraine has vowed to continue targeting strategic facilities linked to Russia’s military efforts in Ukraine.

This attack further disrupts Russia’s energy infrastructure and highlights vulnerabilities in the Russian oil sector. Ukraine’s drone strikes have damaged critical refining infrastructure, including oil storage tanks and processing units, and have reduced Russia’s crude processing capacity.