09:06 AM EST, 01/30/2025 (MT Newswires) -- Oil prices weakened again early on Thursday, falling for a second day on higher U.S. inventories and threats by the Trump Administration to impose 25% tariffs on imports from Canada and Mexico, the two largest sources of U.S. oil imports.

West Texas Intermediate crude oil for March delivery was last seen down US$0.12 to US$72.50, while March Brent oil was down US$0.11 to US$76.47.

Donald Trump is threatening to impose punishing tariffs on imports from Canada and Mexico beginning on Feb.1. Canada supplies around four-million barrels per day to the United States, about 20% of the country's consumption, while Mexico, the No.2 supplier, exports around 0.5-million bpd. The effect of any levies on U.S. oil prices remains uncertain.

The Trump Administration on Wednesday said it is committed to imposing the tariffs on Saturday, though Howard Lutnick, Trump's nominee to run the Commerce Department, said in Senate testimony Canada can avoid the tariff if it cracks down on smuggling of the illegal opoid fentanyl into the United States.

The tariff threat is unsettling markets already uneasy over rising U.S. inventories amid expectations supply will begin topping demand on rising production from North and South America this year, while OPEC+ expects to be returning 122,000 barrels per day of additional supply monthly for 18 months beginning in April.

"All oil considerations are in the shadow of what tariffs might be announced on Canada and Mexico. The US's biggest import partners, and oil considerations are mesmerised by what will come after February 1 when any trade restrictions are promised to be unveiled," PVM Oil Associates noted.