Investing.com-- Oil prices fell in volatile Asian trade on Tuesday after President Donald Trump declared a national emergency on his first day in office with the intent of shoring up U.S. energy production.
But losses in crude were limited by weakness in the dollar, while Trump also flagged plans for more sanctions against Venezuela, which could tighten oil markets.
Focus also remained on recent U.S. sanctions on Russian crude, while traders priced in a smaller risk premium into crude after Israel and Hamas signed a ceasefire agreement.
Brent oil futures expiring in March fell 0.1% to $80.06 a barrel, while West Texas Intermediate crude futures fell 0.9% to $76.69 a barrel by 20:07 ET (01:07 GMT).
Trump plans to ramp up US energy production
Trump- who took office on Monday- said in a White House briefing that he will declare a national energy emergency and use “all necessary resources” to build more energy infrastructure.
Trump said he will end former President Joe Biden’s climate change policies, ending curbs on energy production and use, while also allowing more mining and processing of non-fuel minerals.
Trump also said he will end land leasing to wind farms, and that the U.S. will withdraw from the Paris Climate Accord. Trump’s energy measures are aimed at lowering the cost of living.
Trump’s comments- while scant on details- ramped up bets that U.S. oil production will increase even further in the coming months, after averaging around record highs of 13 million barrels per day in 2024.
Such a trend is expected to offset at least some supply tightening from U.S. sanctions against Russia and extended production cuts by the Organization of Petroleum Exporting Countries.
But in separate comments, Trump flagged a hawkish stance against Venezuela, and that the U.S. was likely to stop buying oil from the country. Trump is expected to potentially impose tighter sanctions against the Latin American nation, tightening crude markets.
Oil losses limited by dollar relief
Still, further losses in crude were limited by weakness in the dollar, as Trump did not declare trade tariffs against China in his first day in office, as widely feared.
While Trump did flag plans for an America-first trade policy, markets bet that a softer stance on tariffs will help bring down inflation and interest rates in the long term.
A less strict stance against China also bodes less pressure on the world’s biggest oil importer, which could help underpin its appetite for crude.