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

    COP29 climate summit overruns as $250 billion draft deal stalls

    By Valerie Volcovici and Gloria Dickie BAKU (Reuters) -The COP29 climate summit ran into overtime on Friday, after a draft deal that proposed developed nations take the lead in providing…

    Oil prices climb 1% to two-week high as Ukraine war intensifies

    By Scott DiSavino (Reuters) -Oil prices edged up about 1% to a two-week high on Friday as the intensifying war in Ukraine this week boosted the market’s geopolitical risk premium.…

    Leave a Reply

    Your email address will not be published.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

    You Missed

    COP29 climate summit overruns as $250 billion draft deal stalls

    • November 22, 2024
    COP29 climate summit overruns as $250 billion draft deal stalls

    SEC Fines Webull, Two Broker-Dealers for Compliance Failures

    • November 22, 2024
    SEC Fines Webull, Two Broker-Dealers for Compliance Failures

    SEC Fines Webull, Two Brokers-Dealers for Compliance Failures

    • November 22, 2024
    SEC Fines Webull, Two Brokers-Dealers for Compliance Failures

    Oil prices climb 1% to two-week high as Ukraine war intensifies

    • November 22, 2024
    Oil prices climb 1% to two-week high as Ukraine war intensifies

    Oil prices edge up to 2-week high as Ukraine war intensifies

    • November 22, 2024
    Oil prices edge up to 2-week high as Ukraine war intensifies

    COP29 climate summit overruns as $250 billion draft deal flops

    • November 22, 2024
    COP29 climate summit overruns as $250 billion draft deal flops