In a Thursday notice to shoppers, Citi strategists assessed how the upcoming 2024 U.S. presidential election, which is able to possible be a battle between Donald Trump and Kamala Harris, may impression oil costs.
Below a Trump administration, the impression on the oil market “could possibly be internet 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 facet, Citi sees the potential for elevated sanctions on Iran underneath Trump as a major bullish issue, although even this might have a restricted impression.
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.
Alternatively, Harris’s vitality insurance policies are anticipated to align carefully with these of the present Biden administration, which may preserve or barely improve regulatory pressures on the oil business.
Harris’s strategy to Iran is prone to be much less confrontational, sustaining the established order fairly than reimposing extreme sanctions. Her administration may proceed to assist a diplomatic strategy, decreasing the probability of serious disruptions in Iranian oil exports.
Furthermore, Harris could possibly be extra supportive of a Center East ceasefire, which may additionally add to the steadiness within the area and its oil provide dynamics.
In the meantime, Trump’s environmental insurance policies may additionally play a job. Citi stated the administration may roll again environmental rules and halt aggressive Democratic gasoline economic system requirements.
Trump’s stance towards electrical car (EV) subsidies may decelerate the adoption of EVs, sustaining increased demand for oil. Nonetheless, Elon Musk’s latest endorsement of Trump “could moderate this impact,” strategists stated.
Conversely, a Harris administration is anticipated to take care of or barely intensify the present administration’s regulatory strategy.
“Harris’s vitality coverage wouldn’t look too completely different from these of the incumbent administration,” strategists identified.
This consists of supporting renewable vitality initiatives and sustaining stricter rules on fossil gasoline manufacturing.
The potential impacts on oil costs additionally prolong to infrastructure and regulatory measures. Below Trump, there could possibly be efforts to extend leasing and acreage auctions for oil manufacturing, significantly on federal lands. This might enhance home provide, however the quick results may be restricted attributable to broader market circumstances and legislative processes required to enact vital adjustments.
Alternatively, Harris may push for extra stringent rules underneath the Clear Air Act and Clear Water Act, though these may face authorized challenges. Her administration may additionally intention to section out new inside combustion engine car gross sales by 2035, “though this would be again challenged by courts,” strategists remarked.
From a geopolitics perspective, Trump’s shut relationship with Saudi Arabia may result in elevated oil provide from OPEC+, probably reducing costs, In accordance with Citi. Equally, Trump has additionally talked about negotiating a deal to finish the Russia-Ukraine battle. If profitable, this might additionally probably ease the oil and gasoline markets.
