Oil Analysts Divided on Trump’s Impact on Oil Prices
Oil markets have kicked off the new week on the back foot, falling for the second consecutive day after President Trump was sworn in for a second term on Monday.
Brent crude for March delivery was down 0.85% to trade at $79.49 per barrel at 11:40 am ET while WTI crude for February delivery declined 1.5% to $76.68 per barrel. According to PVM oil analyst Tamas Varga, the price declines can be chalked up to the huge uncertainty over the incoming president’s new policies.
“Given the performance of the market so far this year, it is reasonable to see some people take profit before the Trump administration’s modus operandi becomes clearer.” Varga told Reuters.
Last month, a survey by law firm Haynes Boone LLC revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term. Trump says he’ll push shale producers to ramp up output.
However, commodity experts at Standard Chartered have predicted that the strength in oil markets witnessed at the start of the new year is likely to persist, powered by, among other things, the removal of more Russian barrels from the market following sanctions. According to StanChart, the new restrictions roughly triple the number of directly sanctioned Russian crude oil tankers, enough to affect around 900,000 barrels per day (bpd). Whereas it’s highly likely that Russia will try to circumvent the sanctions by employing even more shadow fleet tankers and ship-to-ship transfers, StanChart sees 500,000 bpd of displacements over the next six months.
Other than the sanctions, StanChart says there are other reasons for the strength in prompt markets: OPEC+ has largely stuck to its target quotas; non-weather-related demand is more robust than consensus expected; and non-OPEC supply growth is coming in lower-than-expected. In short, StanChart says the market strength is likely to persist after weather patterns return to seasonal averages. Last month, commodity analysts at Standard Chartered argued that the latest decision by OPEC+ to delay the planned output increase by three months to April 2025, and extend the full unwind of production cuts by a year until the end of 2026 will ensure that oil markets are not oversupplied in 2025.