Oil prices fall after Colombia's tariff threat is reversed

Oil prices retreated on Monday after the United States pulled back from sanctions threats against Colombia over illegal immigration, alleviating concern about oil supply disruptions.

Data from analytics firm Kpler shows that Colombia last year sent about 41% of its seaborne crude exports to the U.S. Brent crude for March delivery slipped 1.99% to trade at $76.94 per barrel at 9.50 am ET while WTI crude for February delivery fell by 2.2% to change hands at $73.02 per barrel. 

“The Government of Colombia has agreed to all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay,” White House press secretary Karoline Leavitt said in a statement late on Sunday.

Washington swiftly reversed plans to impose tariffs and sanctions on Colombia after the country agreed to accept deported migrants from the United States. While the issue has been settled for now, it has left the market jittery about Trump’s ongoing muscle-flexing.

"There is broad-based negative sentiment in the market. Even if the sanctions didn't take place, this still creates nervousness that Trump will bully whoever needs to be bullied to get his way," said Bjarne Schieldrop, chief commodities analyst at SEB. "Fundamentally, the market is surprisingly tight," he added.

Trump also weighed in on the Ukraine war and OPEC, "One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away," Trump said.

However, OPEC+ appears unfazed by Trump’s antics, and has signalled a willingness to go ahead with earlier plans to start raising oil output from April. Standard Chartered has argued that the decision by OPEC+ to delay the planned output increase by three months to April 2025, and extend the full unwind of production cuts by a year until the end of 2026 will ensure that oil markets are not oversupplied in 2025. According to the commodity experts, by both delaying the start of voluntary cut unwinds and flattening the slope of the m/m increases, OPEC+ has effectively removed a large amount of oil from the 2025 plan.