Washington, Jan 31 (Reuters) - Phillips 66 corrected their previous statement indicating that tariffs are expected to redirect Canadian oil away from U.S. markets, not reduce production in the Midwest and Rocky Mountain region.
President Donald Trump announced on Friday that his administration plans to implement tariffs on oil and gas around Feb. 18, with a potential reduction in the tariff on Canadian crude.
Currently, the U.S. imports approximately 4 million barrels per day of oil from Canada, with about 70% processed by U.S. Midwest refineries. Analysts and companies caution that tariffs on oil imports could lead to decreased fuel production at these facilities and increased costs for consumers.
Trump, without specifying the target country or providing further details, stated in the Oval Office that, We're going to put tariffs on oil and gas… That'll happen fairly soon, I think around the 18th of February.
When asked about Canadian crude, Trump mentioned, I'm probably going to reduce the tariff a little bit on that. We think we're going to bring it down to 10% for the oil, shifting from the previously mentioned 25%.
U.S. oil refiners, particularly in the Midwest, rely on imported crude due to their facilities being configured for heavier grades from Mexico and Canada. These refiners are awaiting clarity while bracing for potential tariffs on Canadian and Mexican crude imports.
According to data from TD Cowen, refiners like Phillips 66, HF Sinclair, and Par Pacific Holdings have significant exposure to Canadian crude. Valero's Chief Operating Officer, Gary Simmons, mentioned during a call with analysts that their teams are preparing for various scenarios in response to Trump's tariffs.
Valero, the second-largest U.S. refiner by capacity, remains vigilant amidst the impending changes in the oil and gas industry.