The chaos in global trading networks created by the United States’ tariffs and the trade war between the world’s two biggest economies has serious implications for Trinidad & Tobago. The most immediate impact is through the sharp drop in oil prices, with benchmark Brent dropping from close to US$75 a barrel at the beginning to April to US$64 by the end of last week. This drop was in response to both the economic uncertainty created by the tariffs and an OPEC decision to increase production.
While T&T is primarily a gas-based economy (with gas accounting for almost 90 % of hydrocarbon production on an energy equivalence basis), oil is still an important source of Government revenue, through petroleum profits taxes, supplemental petroleum taxes, royalties and dividends from state-owned Heritage Petroleum. The annual government revenue estimates for this fiscal year were based on an oil price of US 77.80 per barrel.
The new LNG pricing formulas agreed between the Government and the Atlantic shareholders, based on a combination of Asian and European LNG benchmark prices and Brent crude prices, mean that the lower oil prices will also impact our LNG export prices. Japanese and European LNG prices have also retreated, though they still remain at historically high levels, above US$10 per mmbtu (compared to Henry Hub prices in the US$ 3.50 range). The 2025 government revenue estimates were based on an average wellhead price of US$3.59, which is a combination of both LNG marketing contract prices and domestic gas prices covering a range of contracts.
Methanol prices typically broadly follow global economic ups and downs, given the fact that demand for methanol is closely correlated with economic activity (it is an important basic chemical input into a very broad range of products). Methanol prices were relatively strong in the first quarter of 2025, but with a global downturn they may well face significant downside risk over the next few months. Methanol exports from Trinidad to the USA would be subject to the new ten percent import tariffs, but it is unclear how this will impact the market, especially as the US is not a particularly important market for Trinidad methanol.
For ammonia, by contrast, Trinidad is an important producer for the US (accounting for over 40% of imported ammonia into the US). Despite the tariff imposition, ammonia markets have remained relatively muted. With most ammonia production going into fertilizers, the impact of the US-China trade war on US agriculture could play an important role in the market. Urea prices in the US rose last week in response to the tariffs (with some urea producing countries being threatened with the higher reciprocal tariffs) but it is unclear how they will respond into the future. It might take a while for the full picture to emerge.
One positive from lower oil prices is that the price of imported gasoline, diesel and jet fuel should also decline. However, it needs to be remembered that we export approximately two times more crude oil than we import petroleum products.
The implications of the global trade and economic uncertainty go beyond just falls in commodity prices. One crucial factor is how the trade war between the US and China, and the across the board 10% tariff on US imports, might disrupt supply chains. With so many imports coming from or through the United States, inflation caused by the new tariffs will inevitably flow through to the Caribbean.
While food inflation is the issue that will probably hit the average citizen first and most obviously, there are also implications of the supply chain disruptions for the energy sector. China is an important manufacturer of many components that going into equipment and other supplies used in the energy sector and if those items are assembled in the US, the unprecedented tariffs placed on Chinese imports into the US will lead to significant price increases. The danger is that this will push up costs in the Trinidad energy sector, especially for anything sourced out of the US. The energy sector consumes a lot of steel and other speciality metals which are impacted by the tariffs.
Companies may well look to alternatives or to purchase directly from Chinese, European or other Asian suppliers. There may even be some upside potential for a few Trinidadian manufacturers, such as IAL Engineering, who have the capacity to produce some items for supply to domestic and regional markets.
The general sense of uncertainty will inevitably lead to many companies delaying investment decisions. Confidence is an important commodity in any business, and it is in short supply around the world and in Trinidad & Tobago.