Citigroup Inc. said in a research note that Donald Trump's presidency could have a bearish impact on oil prices due to a combination of factors including tariffs, favorable policies for the sector and pressure on the Organization of the Petroleum Exporting Countries (OPEC) and its allies to pump more crude into the market.
“Trump may roll back environmental policies, but it is highly unlikely that he will repeal the Inflation Reduction Act because of its positive effects in Republican-voting states,” analysts said.
The main risk to higher prices under Trump is pressure on Iran, although that impact is limited, they added.
If Trump again embraces his “maximum pressure” campaign on Tehran, Iranian exports could fall by 500,000 to 900,000 barrels per day.
US President Joe Biden on Sunday dropped his re-election bid and endorsed his running mate Kamala Harris in the November election after mounting pressure from fellow Democrats.
“A Harris administration could be similar to or slightly to the left of Biden,” Citi analysts said.
Meanwhile, the market still faces geopolitical, cyber and weather risks.
The group added: “The hurricane season is not over yet, and tensions in the Middle East remain high, with fighting continuing in Gaza, the West Bank, Lebanon, Syria and Yemen. However, pressure is also mounting for a ceasefire that could be reached this summer.”
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