Trump Presidency and Oil Prices

(Reuters) – A Donald Trump presidency could be net bearish for oil prices due to a combination of factors including tariffs and oil-friendly policies. Trump might push the Organization of the Petroleum Exporting Countries and allies (OPEC+) to release more oil into the market, according to a research note from Citi on Thursday.

Environmental Policies

Analysts noted that Trump could roll back environmental policies, although broadly overturning the Inflation Reduction Act seems unlikely because of its positive impacts, particularly in Republican-leaning states.

Bullish Risk Factors

The main bullish risk for oil markets under a Trump presidency would be pressure on Iran. If Trump were to readopt a “maximum pressure” campaign on Iran, it could impact Iranian oil exports by 500-900 thousand barrels per day.

Political Landscape

U.S. President Joe Biden abandoned his reelection bid on Sunday and endorsed Vice President Kamala Harris as the party’s candidate for the November election, following increasing pressure from fellow Democrats. Analysts from Citi suggested that a Harris administration may be similar to, or slightly left of Biden.

Market Risks

Meanwhile, the market continues to face geopolitical, cyber, and weather-related risks. The hurricane season is far from over, and Mideast tensions remain high, with ongoing conflicts in Gaza, the West Bank, Lebanon, Syria, and Yemen. However, there is mounting pressure for a ceasefire, which could possibly occur this summer, according to Citi.