BENGALURU: Goldman Sachs said on Friday a proposed 10% US oil tariff could cost foreign producers $10 billion per year, as Canadian and Latin American heavy crudes remain reliant on US refiners due to limited alternative buyers and processing capabilities.
President Donald Trump plans to impose a 25% tariff on Mexican crude and a 10% levy on Canadian crude starting in March, a delay from his initial proposal.
Despite this, Goldman expects the US to remain the primary destination for heavy crude, as advanced refining capabilities and low costs continue to make American refiners the most competitive buyers. Goldman estimates light oil prices would need to rise by 50 cents per barrel to make medium crude from the Middle East more attractive to Asian refiners, as US Gulf Coast refiners prioritise domestic light crude over imported medium grades.
The investment bank estimates US consumers would face an annual tariff cost of $22 billion, while the government would generate $20 billion in revenue.
Meanwhile, refiners and traders could see $12 billion in benefits by linking discounted US light crude and foreign heavy crude to premium coastal markets, Goldman said.
