FIRST TAKE: US tariffs on Canada, Mexico BULLISH for US gasoline, diesel prices; BEARISH for global HSFO, heavy crude prices   US tariffs on oil imports from Canada (10%) and Mexico (25%) are set to take effect Feb. 4 and will have varied implications for pricing and trade in the US, Canada, Mexico and globally. Although some of those implications are not significant volumetrically, oil prices are always set on the margin and these changes will drive prices in the affected markets. Below are the top 10 marginal changes we have so far identified with near-term oil pricing implications. We will explore these in more detail in subsequent reports:   1. New England will see higher gasoline prices. We do not think current Canadian refiners supplying gasoline to the US will absorb the full 10% tariff and thus some of this cost will be passed on, resulting in lower Canadian runs/exports to the US and higher gasoline imports from Europe. 2. US PADD 2 (Midwest) refiners will, on the margin, run more light-sweet WTI and less heavy-sour WCS, which will lower overall runs and boost gasoline prices. However, Canadian crude producers will absorb much of the tariff, some will likely be passed along, driving this US refiner grade shift. 3. US PADD 5 (West Coast) refiners will shift from WCS to more expensive alternative heavy grades, cutting their margins and boosting PADD 5 product prices. It is worth noting that PADD 5 gasoline prices have already been on the rise due to planned work at three of five Los Angeles-area refiners as well as a fire late Feb. 1 at PBF’s Martinez refinery. 4. US PADD 3 (Gulf Coast) coking refiners will get hit fairly hard from more expensive WCS and in particular Maya. We expect these refiners to shift to a lighter slate as economic replacement heavy grades are limited. Reduced US Gulf Coast coker utilization will also tighten middle distillate supply. This will cut total runs and in turn, raise gasoline and as well as middle distillate prices. 5. WCS re-exports out of the USGC may present a possible reprieve for Canada, as we believe the language of the tariff for now to only apply to goods "entered for consumption." WCS exports out of Western Canada will be redirected to Asia (China) instead of the US. Similarly, Maya crude may be redirected to Asia. Together, this weighs on international heavy crude price differentials. 6. Mexico’s exports of HSFO to the US for coker feed will likely be redirected internationally. This will weigh on international HSFO prices. 7. With the US running more light crude and sparing coking, global balances shift, driving light-heavy crude price differentials wider. This will mostly be seen in weaker heavy crude/HSFO prices but could also be seen as bullish for Brent as the US exports less WTI. 8. We expect this to be bullish for Atlantic Basin clean tanker freight rates, as well as for North Pacific dirty tanker freight rates. 9. Mexico has said it will retaliate against the US tariffs. Hypothetically, Mexico could place tariffs on oil product imports from the US. This would be bullish for European gasoline prices as it is the most likely source of backfill. Mexico could also redouble efforts to expand its refinery capacity. 10. Canada said at a press conference Feb. 1 that it will retaliate in a thoughtful way. When asked if that might include reducing oil exports to the US, Prime Minister Justin Trudeau did not answer. It is hard to think of actions that Canada could take which do not also hurt Canada. However, hypothetically, any reduction in Canadian crude exports in total either by price impacts from US tariffs or explicit reductions by Canadian policy would be bullish for global oil prices.   Read more on Platts Connect: https://tinyurl.com/2db3n3eu