The US may impose stricter oil sanctions against Iran under the incoming Donald Trump administration, analysts suggest. Trump, the Republican nominee, emerged victorious over Kamala Harris, the vice president and Democratic candidate, in the recent presidential election. His earlier term as US president saw a campaign that significantly increased Iran's international isolation and adversely affected its economy.
With Trump back in the White House, we could witness a resurgence of those strategies. ING Bank stated, 'For oil fundamentals, a Trump victory could provide some short-term upside with the risk of stricter sanction enforcement against Iran.' Nonetheless, they added, 'in the medium to longer term, a Trump victory could be more bearish for oil due to trade and foreign policy dynamics.' During the campaign, Trump was vocal in criticizing current US President Joe Biden for not rigorously enforcing oil-export sanctions against Iran.
In recent trading, West Texas Intermediate crude oil decreased by 0.3% to $71.76 a barrel, while Brent dropped by 0.7% to $75 a barrel. Concerns about a potential global trade war leading to decreased demand for oil plagued crude futures, as indicated by Saxo Bank's analysis. Ole Hansen, Saxo's Head of Commodity Strategy, warned that 'the geopolitical landscape will also attract close attention, especially the US-Russia relations, the Russia-Ukraine war, and the Middle East, where a Trump administration may tighten sanctions on Iranian oil flows.' Iran, for its part, maintains that there is 'no significant difference' in the outcome of the US presidential election.
Additionally, a weaker US dollar and OPEC's recent decision to delay supply increases for a month may bolster oil prices. Potential supply disruptions in the US Gulf of Mexico, attributed to tropical storm Rafael, further underscore these challenges..