In a Thursday be aware to purchasers, Citi strategists assessed how the upcoming 2024 U.S. presidential election, which can doubtless be a battle between Donald Trump and Kamala Harris, may affect oil costs.
Beneath a Trump administration, the affect on the oil market “could possibly be web bearish attributable to commerce tariffs, oil-and-gas-friendly insurance policies/deregulation, and pushing OPEC+ to launch oil to the market,” strategists highlighted.
On the flip aspect, Citi sees the potential for elevated sanctions on Iran beneath Trump as a big bullish issue, although even this might have a restricted affect.
Trump’s historical past with Iran means that reimposing sanctions may take away substantial volumes of Iranian oil from the market, thereby pushing costs up.
Then again, Harris’s power insurance policies are anticipated to align carefully with these of the present Biden administration, which may preserve or barely enhance regulatory pressures on the oil business.
Harris’s method to Iran is prone to be much less confrontational, sustaining the established order reasonably than reimposing extreme sanctions. Her administration would possibly proceed to assist a diplomatic method, decreasing the chance of great disruptions in Iranian oil exports.
Furthermore, Harris could possibly be extra supportive of a Center East ceasefire, which may additionally add to the soundness within the area and its oil provide dynamics.
In the meantime, Trump’s environmental insurance policies may additionally play a task. Citi stated the administration would possibly roll again environmental rules and halt aggressive Democratic gas economic system requirements.
Trump’s stance in opposition to electrical car (EV) subsidies may decelerate the adoption of EVs, sustaining larger demand for oil. Nevertheless, Elon Musk’s latest endorsement of Trump “may reasonable this affect,” strategists stated.
Conversely, a Harris administration is predicted to take care of or barely intensify the present administration’s regulatory method.
“Harris’s power coverage wouldn’t look too totally different from these of the incumbent administration,” strategists identified.
This consists of supporting renewable power initiatives and sustaining stricter rules on fossil gas manufacturing.
The potential impacts on oil costs additionally lengthen to infrastructure and regulatory measures. Beneath Trump, there could possibly be efforts to extend leasing and acreage auctions for oil manufacturing, notably on federal lands. This might enhance home provide, however the fast results could be restricted attributable to broader market circumstances and legislative processes required to enact important modifications.
Then again, Harris would possibly push for extra stringent rules beneath the Clear Air Act and Clear Water Act, though these may face authorized challenges. Her administration may additionally purpose to section out new inside combustion engine car gross sales by 2035, “although this could be once more challenged by courts,” strategists remarked.
From a geopolitics perspective, Trump’s shut relationship with Saudi Arabia may result in elevated oil provide from OPEC+, doubtlessly reducing costs, In response to 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 gasoline markets.