Trump win points to net bearish oil outlook: Citi

Investing.com — A second Trump presidency could signal a bearish outlook for oil markets, according to Citi, as it raises potential for shifts in trade policies, OPEC+ dynamics, and domestic energy regulations.

Following Trump’s victory, Brent crude initially dipped nearly $2 per barrel before recovering. Citi strategists anticipate downward pressure on prices to continue moving into 2025, with the average Brent price forecast at $60 per barrel, around 20% lower than current levels.

This reflects potential trade tensions and increased supply from OPEC+ nations, alongside a US energy policy likely to support domestic fossil fuels.

Citi highlights that Trump’s return could lead to renewed tariffs, which might dampen global economic growth, particularly in Europe and China. The report notes that a 10% US tariff on global imports could reduce global GDP by 0.4%, while a targeted 60% tariff on Chinese imports might reduce China’s GDP by 2.4%.

“This could further dent into global oil demand growth, especially for diesel as the fuel of international logistics, posing downside risks to our current global oil demand growth expectations of 0.9-m b/d for next year,” strategists led by Francesco Martoccia said in a note.

On the supply side, Trump’s influence could prompt OPEC+ to accelerate the easing of production cuts, potentially boosting supply in global markets.

Strategists point out that Trump may adopt a less aggressive stance on “maximum pressure” sanctions, unlike his first term, though risks of renewed sanctions on Venezuela and Iran persist, which could lend some support to oil prices.

Trump’s policies might also benefit US energy producers through potential reversals of Biden-era regulations. This could mean lower royalty rates and eased environmental restrictions, potentially making federal lands more accessible for oil and gas exploration.

However, Citi expects a limited immediate impact on overall production due to current market constraints.

Moreover, Trump may maintain some provisions of the Inflation Reduction Act (IRA), especially given its popularity in Republican states benefiting from significant renewable investments. However, stricter criteria for electric vehicle subsidies could dampen EV adoption rates, reducing a demand shift away from fossil fuels.

This post is originally published on INVESTING.

  • Related Posts

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    (Reuters) – Mexico plans to set aside about $6 billion from its 2025 draft budget for heavily indebted national oil company Pemex and would help its debt obligations next year,…

    US dollar and bitcoin advance spurred by Trump tariff expectations

    By Chibuike Oguh and Harry Robertson NEW YORK/LONDON (Reuters) -The U.S. dollar rose to a 6-1/2-month high against major peers on Tuesday, while bitcoin pared gains after earlier hitting a…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Economic Calendar for the Week 18.11.2024 – 24.11.2024

    • November 13, 2024
    Economic Calendar for the Week 18.11.2024 – 24.11.2024

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    • November 12, 2024
    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    US dollar and bitcoin advance spurred by Trump tariff expectations

    • November 12, 2024
    US dollar and bitcoin advance spurred by Trump tariff expectations

    Gold prices stumble as strong Treasury yields, dollar bite

    • November 12, 2024
    Gold prices stumble as strong Treasury yields, dollar bite

    US oil industry urges Trump to ditch Biden climate policies

    • November 12, 2024
    US oil industry urges Trump to ditch Biden climate policies

    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises

    • November 12, 2024
    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises