Trump 2.0: What does it mean for oil?
Several analysts note that the global oil market is reacting to concerns surrounding the return of Donald Trump to the White House, anticipating potential policy shifts that could impact oil demand and trade dynamics.
PHOTO: The east side of the US Capitol in the early morning. Getty Images
Brent's price gained after the global oil market factored in Republican candidate and former President Donald Trump’s pivotal victory in the high-stakes 2024 US election.
Trump’s return to the Oval Office will have significant implications for the global oil market, analysts suggest. His administration may impose more stringent sanctions on Iran, potentially dealing a major blow to crude oil supply.
The new administration “opens the door for a more hawkish US stance against Iran,” which could translate into stricter sanctions enforcement on Tehran’s oil production, two analysts from ING Bank said. “Stricter enforcement of sanctions potentially leaves a little more than 1m b/d [1 million b/d] of oil supply at risk,” they added.
More broadly, the global geopolitical landscape will attract close attention from the oil market, specially the future of US-Russia relations, the ongoing conflict in Ukraine and the Middle East, and US-China tensions.
Trump’s presidency could provoke Iranian retaliation in the Middle East. “Because of President Trump’s victory, there is a growing sense that Iran will lash out. Israel of course is on guard and even potentially talking about a preemptive strike,” Price Futures Group’s senior market analyst Phil Flynn said.
Besides, a Trump administration could see a surge in US oil production, according to market analysts. During Trump’s first term, the US oil industry got extensive federal support to increase production.
His policies are likely to be “neutral to slightly bullish” for the oil market, ANZ Bank’s senior commodity strategist Daniel Hynes remarked. “Trump has been a big proponent of the US oil and gas industry, and has promised to boost the oil and gas output” he said.
Overall, the market will take time to assess the complex impact of Donald Trump’s election as the 47th US President on oil fundamentals and prices.
By Aparupa Mazumder
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