In a Thursday observe to shoppers, Citi strategists assessed how the upcoming 2024 U.S. presidential election, which can probably be a battle between Donald Trump and Kamala Harris, may impression oil costs.
Beneath a Trump administration, the impression on the oil market “may very well be internet bearish because of 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 beneath Trump as a big 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 enhance regulatory pressures on the oil business.
Harris’s method to Iran is prone to be much less confrontational, sustaining the established order quite 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 may very well 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 task. Citi stated the administration would possibly roll again environmental laws and halt aggressive Democratic gasoline financial system requirements.
Trump’s stance towards electrical automobile (EV) subsidies may decelerate the adoption of EVs, sustaining increased demand for oil. Nevertheless, Elon Musk’s current endorsement of Trump “may average this impression,” strategists stated.
Conversely, a Harris administration is predicted to keep up or barely intensify the present administration’s regulatory method.
“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 laws on fossil gasoline manufacturing.
The potential impacts on oil costs additionally prolong to infrastructure and regulatory measures. Beneath Trump, there may very well be efforts to extend leasing and acreage auctions for oil manufacturing, notably on federal lands. This might enhance home provide, however the rapid results is perhaps restricted because of broader market circumstances and legislative processes required to enact important modifications.
Alternatively, Harris would possibly push for extra stringent laws beneath the Clear Air Act and Clear Water Act, though these may face authorized challenges. Her administration may also intention to section out new inside combustion engine automobile 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 may result in elevated oil provide from OPEC+, doubtlessly decreasing 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.
