Oil fell more than 1% after Trump urged Saudi Arabia and OPEC to bring down its cost during his Davos address.
Prices dipped after Trump announced he would be asking Saudi Arabia and OPEC to bring down the cost of oil during his speech.
Uncertainty over how proposed tariffs and energy policies would affect global economic growth and energy demand also weighed on prices.
Brent crude futures were down 90 cents, or 1.14%, at $78.1 a barrel by 11:40 a.m. EST (1640 GMT). U.S. West Texas Intermediate crude (WTI) fell $1.01, or 1.34%, to $74.43.
The broader economic implications of U.S. tariffs could further dampen global oil demand growth, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war in Ukraine.
He also vowed to hit the European Union with tariffs and impose 25% tariffs against Canada and Mexico. On China, Trump said his administration was discussing a 10% punitive duty because fentanyl is being sent from there to the U.S.
On Monday he declared a national energy emergency intended to provide him with the authority to reduce environmental restrictions on energy infrastructure and projects and ease permitting for new transmission and pipeline infrastructure.
There will be "more potential downward choppy movement in the oil market in the near term due to the Trump administration's lack of clarity on trade tariffs policy and impending higher oil supplies from the U.S.", OANDA senior market analyst Kelvin Wong said.
On the U.S. oil inventory front, crude stocks rose by 958,000 barrels in the week ended Jan. 17, according to sources citing American Petroleum Institute figures on Wednesday.
Gasoline inventories rose by 3.23 million barrels and distillate stocks climbed by 1.88 million barrels, they said.
Still, several experts agree Trump can put immense pressure on the issue to move the needle.
Giant U.S. asset managers overseeing well over $20 trillion are anticipating continued price pressures because of President Donald Trump's immigration and trade policies, a scenario that will likely keep threatening the bond market this year.
Vanguard, the world's second-largest asset manager, which manages over $10 trillion, said in a first-quarter fixed income outlook report seen by Reuters that it expects "progress on inflation to stall," with core measures of price pressures stuck above the Federal Reserve's 2% target and above 2.5% for most of 2025.
Trade and immigration policies implemented by Trump's Republican administration could complicate the picture further, it said in a report written by its active fixed income team, led by Sara Devereux, the global head of fixed income group.
david"While our base-case outlook is positive, we emphasize that the uncertainty created by the incoming administration creates a broader range of potential outcomes for growth, inflation, and monetary policy, both domestically and abroad," it said.
Investors are waiting for more announcements from the new administration about policies on tariffs, immigration and tax cuts.
WEF President and CEO, asked about the relationship between U.S. and China during the next four years
"I think that we're going to have a very good relationship."
"All we want is fairness. We just want a level playing field."
"Right now it is not a fair relationship, the deficit is massive."
"I like President Xi very much, I've always liked him."
"President Putin really liked the idea of cutting way back on nuclear."
"Hopefully China can help us stop the war with, in particular Russia, Ukraine. They have a great deal of power over that situation. And, we'll work with them. And I mentioned that with the during our phone conversation with President Xi."
“He called me,” Trump said of the phone call with Xi, drawing laughter from the audience.
"We want to see if we can denuclearize, and I think that is possible."
He said Ukraine was ready to make a deal, that the death toll was higher than reported and that the war would never have happened if he was in office.
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