Following Donald Trump’s victory in the 2024 U.S. presidential election, oil prices increased to $75 per barrel, causing new market concerns worldwide.
By 0400 GMT, Brent crude oil futures were up 0.87 percent, or 65 cents, at $75.57 a barrel. At $72.23, the price of U.S. West Texas Intermediate (WTI) oil increased 54 cents, or 0.75 percent.
Under the Donald Trump administration, U.S. oil producers anticipate fewer restrictions on crude production, which would increase supply and, in turn, drive down prices.
However, it’s not that simple: Trump declared the victor of the 2024 election on Wednesday and has also promised to impose additional sanctions on Venezuelan and Iranian barrels, which could tighten the global market and raise prices.
At the same time, Trump’s greater propensity for trade wars may decrease oil demand and impede global economic growth. As a result, the forecast for the market’s longer-term prospects is mixed.
In a research note on Monday, Goldman Sachs commodities analysts stated that “the impact of a potential second Trump term on oil prices is ambiguous, with some short-term downside risk to Iran oil supply … and thus upside price risk.”
“However, medium-term downside risk to global GDP from a possible escalation in trade tensions poses a threat to oil demand and, consequently, oil prices.”
Just hours before his victory was officially announced, Trump spoke Wednesday from the Republican campaign headquarters in Florida, expressing his excitement for higher U.S. oil production. He mentioned the independent candidate Robert F. Kennedy, Jr., who he claimed would join his team.
“Bobby, stay away from the oil, stay away from the liquid gold!” Trump said in a light-hearted manner. “We have more than Russia and Saudi Arabia.” Kennedy has a reputation for being an environmental activist.
Under the Biden administration, which progressively altered its stance towards the sector despite running on promises of environmental stewardship, U.S. oil and gas production reached all-time highs.
In light of the slowing global demand for oil and the expanding supply, U.S. crude futures, including West Texas Intermediate and the international benchmark Brent crude, are currently trading between $70 and $75 a barrel, which is less than what many oil producers need to balance their costs and budgets.
“Drill baby, drill is going to run into the energy vigilantes,” he continued. “Now that equity investors in the energy sector understand what free cash flow looks like, they will not give it up. They will allow capital expenditures to increase over their dead bodies.”
According to the Energy Information Administration, the United States produces 22% of the world’s oil, making it the greatest producer. Saudi Arabia comes in second with 11%. The United States is the largest oil consumer in the world and consumes the vast majority of its crude.
