Oil prices soared Monday following US President Donald Trump's announcement of sweeping tariffs on imports from Canada, China, and Mexico, raising fears of supply disruption.

At 08:50 ET (13:50 GMT), Brent Oil Futures were 1.7% higher at $76.98 a barrel, and Crude Oil WTI Futures expiring in March jumped 2.6% to $74.40 a barrel.

Trump tariffs stoke supply disruption fears

The new tariffs, effective Tuesday, impose a 25% levy on Canadian and Mexican goods and a 10% tariff on Chinese imports. Canadian energy products were also among the targeted items with a 10% levy.

The US imports approximately 4 million barrels of Canadian oil and nearly 500,000 barrels of Mexican oil daily. The newly imposed tariffs are expected to increase costs for US refiners, especially those in the Midwest and Gulf Coast regions, potentially leading to higher fuel prices and potential production cuts.

"Canada is a key supplier of crude oil to the US, with the US importing around 4m b/d from Canada (61% of total imports)," said analysts at ING, in a note. "This crude oil is a heavier crude, which many US refineries are configured to run on, particularly in the Mid-West."

In response to the US levies, Canada has announced plans to implement C$155 billion in retaliatory tariffs on American goods. Investors are also bracing for potential countermeasures from China, and Mexico which could further destabilize global markets.

The potential for escalating trade tensions adds a layer of uncertainty to the global economic outlook, with oil markets remaining particularly sensitive to geopolitical developments.