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Oil Price Edge Up As Investors Eye U.S. Election Fallout

As investors watched Thursday's U.S. election, oil prices surged sharply, affecting global tensions, U.S. inventories, and oil supplies from nations like Iran and Venezuela.

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Oil Price Edge Up As Investors Eye U.S. Election Fallout
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7 Nov 2024 8:50 AM IST

Oil prices rose on Thursday as investors focused on the possible consequences of the next U.S. presidential election. The market is still tense as it weighs several variables that could influence supply chains, oil output, and geopolitical stability in the future. The main cause of this volatility is the swings in Brent crude oil futures, which at 0125 GMT had increased by 26%, or 0.35%, to $75.18 per barrel. At $71.85, U.S. West Texas Intermediate (WTI) crude increased 16 cents, or 0.22%.

As the U.S. presidential election results are out, there's a lot of uncertainty about how Donald Trump will shape oil supply policies, both in the U.S. and worldwide.

Concerns around a Trump presidency squeezing oil supply from Iran and Venezuela as well as an approaching storm "more than offset the post-election impact of a stronger U.S. dollar and ... higher-than-expected U.S. inventories," Tony Sycamore, a market analyst with IG, wrote in a note.

Initially, Trump's election outcome triggered a significant sell-off, forcing oil prices to fall by more than $2 while the US currency reached its highest level since September 2022. However, by the end of Wednesday's trading session, front-month contracts had recouped some of their losses, with Brent crude down 61 cents and WTI down 30 cents.

According to Energy Aspect, Donald Trump is likely to reimpose his "maximum pressure policy" of sanctions on Iranian oil. That could reduce supplies by up to one million barrels per day. However, analysts caution that it would be difficult to halt the flow of Iranian oil to China.

In fact, during his first term, Trump placed tougher sanctions on oil supply from Venezuela, measures that were briefly eased by the Biden administration but were later reinstated.

The Energy Information Administration said on Wednesday that oil stockpiles in the United States rose by 2.1 million barrels to 427.7 million barrels for the week ending November 1, above the predicted 1.1 million barrel gain.

Meanwhile, in North America, Hurricane Rafael solidified into a Category 3 hurricane, shutting down approximately 17% of crude oil production, or 304,418 barrels per day, in the United States Gulf of Mexico, according to the US Bureau of Safety and Environmental Enforcement.

Oil Prices Crude oil prices Brent Crude Oil Futures U.S. Presidential Election Hurricane Rafael U.S. West Texas Intermediate Energy Information Administration 
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