U.S. tariffs on Canadian and Mexican energy will take effect Tuesday, but the Goldman Sachs commodities team believes the cost has already been priced into the global oil market.
The analysts said January markets were already pricing in tariffs and predicted Canadian oil will still fetch prices "far above production costs."
The bank in a Sunday note also said the cost of the tariffs to consumers will be about $2-$3/bbl, or 4.75cts to 7.1cts/gal for gasoline and diesel.
Goldman analysts said they expect Canadian producers will have to widen discounts to West Texas Intermediate futures by $3-$4/bbl, which equates to $16.75-$17.75/bbl discounts for Western Canadian Select crude FOB Hardisty, Alberta. Deals on Friday were done at a discount of $13.75/bbl.
The bank also said it believes the tariffs will be temporary and said marine cargos of Mexican or Canadian crude will be rerouted as U.S. refiners turn to replacement crude from Latin America or OPEC.
Goldman maintained its forecast that Brent crude prices will average $78/bbl this year and $73/bbl in 2026.
The bank's analysts, however, warned there is some downside risk to the Brent price forecasts if the tariffs remain in place. Under that scenario, they said the average price for Brent could fall to the mid-to-high $60s by the end of 2026 due to weaker economic growth.
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