Oil prices rose on Thursday after the US presidential election triggered a sell-off. Risks to oil supplies from Trump’s presidency and the Gulf Coast hurricanes outweighed a stronger US dollar and higher inventories.
Brent crude futures rose 65 cents, or 0.87%, to $75.57 a barrel by 0400 GMT. WTI crude rose 54 cents, or 0.75%, to $72.23.
As markets digest Trump’s victory, the US dollar is near a four-month high.
Trump’s election initially triggered a sell-off that sent oil prices down more than $2, while the US dollar rose to its highest level since September 2022. However, front-month contracts pared losses, with Brent down 61 cents and WTI down 30 cents at the end of Wednesday’s session.
Historically, Trump’s policies have been pro-business, likely to support overall economic growth and boost fuel demand. However, any intervention by the Fed in its easing policies could spell more trouble for the oil market.
With the dollar rallying near four-month highs, oil appears to be facing a major headwind following the US election results.
While OPEC is expected to increase supply capacity in January, the rally in oil markets could be limited to the short to medium term as historical trends do not suggest that sanctions will prevent India and China from continuing to buy oil from Russia or Iran.
Donald Trump is expected to reimpose sanctions on Iranian oil. This could reduce supply by up to 1 million barrels per day, according to estimates.China could face a shortage of Iranian crude if Trump tightens sanctions.
Trump also imposed tougher sanctions on Venezuelan oil during his first term, measures that were briefly withdrawn by the Biden administration but later reinstated.
In North America, Hurricane Rafael strengthened into a Category 3 hurricane on Wednesday, shutting down about 17% of U.S. Gulf of Mexico crude production, or 304,418 barrels per day.
The U.S. Energy Information Administration (EIA) said on Wednesday that U.S. crude inventories rose by 2.1 million barrels to 427.7 million barrels in the week ending Nov. 1, contrary to expectations for a 1.1 million barrel increase.
