It has become unexpectedly clear that Donald Trump will once again be the president of the United States. Oil prices fell in his wake. 'We will drill, baby, drill', Trump promised during his campaign. The strong dollar also contributes to the pressure on the price. But Trump's plans could also boost the oil price in the future.
Brent crude has been on the rise since last Tuesday (October 29), when the fuel was listed at $71,21. Yesterday (November 5) it was listed at $75,53. After it became clear that Donald Trump will return to the White House, the price turned lower. At the time of writing (Wednesday afternoon, November 6) the Brent price is $74,36.
For the American oil industry, there is a positive side to the election of Trump as president. Because where Harris wanted to focus on renewable energy, Trump is going all out for fossil fuels. "We will drill, baby, drill", Trump said during his campaign (borrowing from a Republican campaign from 2008).
Shares of several American oil companies such as Exxon Mobil are up today. Incidentally, the company's CEO, Darren Woods, recently said that American oil production is not being increased purely because Trump is in the White House. Economic conditions and demand continue to dominate.
According to analysts, the lower oil price also has everything to do with the strong dollar which makes oil expensive for other countries. With Trump claiming victory, the dollar has increased (further) in value.
Middle East high on priority list
Both Trump and Harris have stated in their campaigns that they want to resolve the conflict in the Middle East. If peace were to come, it could also mean that oil tankers (and the rest of the shipping industry) would no longer be at risk of being attacked in the Red Sea by Houthis in Yemen, who are supported by Iran. Many oil tankers are now avoiding the Suez Canal, where 10% of the oil transported by sea normally passes. The detour via the Good Hope currently costs a lot of time and money.
However, several analysts have also warned that if Trump wins, it could give oil prices a boost. In his second term, Trump is expected to impose tough sanctions on Iran that will hit the country's oil sector. On the other hand, trade wars could negatively impact oil demand, which could push prices down.
OPEC extends production cuts by month
OPEC announced last Sunday (November 3) that the production cuts of 2,2 million barrels per day will be extended by one month until the end of December. This concerns the OPEC countries Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman. The extension of the production cut was already expected due to the low demand and ditto price. The Chinese economy does not seem to be recovering yet and several organizations have revised the demand forecasts for next year downwards. From that point of view it is rather remarkable that this time only one month extension was chosen.
Diesel price
The price of diesel was €119,43 per 100 litres last week, but it is now €122,53 per 100 litres.