In a Thursday be aware to shoppers, Citi strategists assessed how the upcoming 2024 U.S. presidential election, which is able to probably be a battle between Donald Trump and Kamala Harris, might affect oil costs.
Beneath a Trump administration, the affect on the oil market “could possibly be internet bearish resulting from commerce tariffs, oil-and-gas-friendly insurance policies/deregulation, and pushing OPEC+ to launch oil to the market,” strategists highlighted.
On the flip facet, Citi sees the potential for elevated sanctions on Iran below Trump as a big bullish issue, although even this might have a restricted affect.
Trump’s historical past with Iran means that reimposing sanctions might take away substantial volumes of Iranian oil from the market, thereby pushing costs up.
Alternatively, Harris’s power insurance policies are anticipated to align carefully with these of the present Biden administration, which might preserve or barely improve regulatory pressures on the oil trade.
Harris’s method to Iran is more likely to be much less confrontational, sustaining the established order quite than reimposing extreme sanctions. Her administration would possibly proceed to assist a diplomatic method, lowering the chance of serious disruptions in Iranian oil exports.
Furthermore, Harris could possibly be extra supportive of a Center East ceasefire, which might additionally add to the steadiness within the area and its oil provide dynamics.
In the meantime, Trump’s environmental insurance policies might additionally play a job. Citi mentioned the administration would possibly roll again environmental rules and halt aggressive Democratic gasoline economic system requirements.
Trump’s stance towards electrical car (EV) subsidies might decelerate the adoption of EVs, sustaining increased demand for oil. Nevertheless, Elon Musk’s current endorsement of Trump “might average this affect,” strategists mentioned.
Conversely, a Harris administration is anticipated to keep up or barely intensify the present administration’s regulatory method.
“Harris’s power coverage wouldn’t look too completely different from these of the incumbent administration,” strategists identified.
This consists of supporting renewable power initiatives and sustaining stricter rules on fossil gasoline manufacturing.
The potential impacts on oil costs additionally prolong to infrastructure and regulatory measures. Beneath Trump, there could possibly be efforts to extend leasing and acreage auctions for oil manufacturing, significantly on federal lands. This might increase home provide, however the speedy results could be restricted resulting from broader market circumstances and legislative processes required to enact vital modifications.
Alternatively, Harris would possibly push for extra stringent rules below the Clear Air Act and Clear Water Act, though these might face authorized challenges. Her administration may additionally goal to part out new inside combustion engine car gross sales by 2035, “although this is able to be once more challenged by courts,” strategists remarked.
From a geopolitics perspective, Trump’s shut relationship with Saudi Arabia might result in elevated oil provide from OPEC+, doubtlessly decreasing costs, In line with Citi. Equally, Trump has additionally talked about negotiating a deal to finish the Russia-Ukraine battle. If profitable, this might additionally doubtlessly ease the oil and fuel markets.
