A Trump administration means radical changes for tariffs on imports, climate policy and international affairs. For the energy sectors, the implications are many. Following are some thoughts about it.
Oil Markets:
Tariffs imposed by President-elect Donald Trump could slow economic growth in both the U.S. and globally, potentially cutting oil demand by as much as 0.5 million barrels per day in 2025—about one-third of the current forecast for global oil demand growth next year.
This decline in demand could lead to a drop in oil prices by $5 to $7 per barrel, assuming no other major disruptions, such as a further escalation of tensions in the Middle East. Weaker demand would likely put pressure on the refining industry, but U.S. refiners are expected to outperform their global counterparts, thanks to tariff protection that shields them from foreign competition.
At the same time, the Trump administration is facing a complex and risky situation in the Middle East, which could evolve into a significant geopolitical threat. If tensions continue to escalate in the region, the resulting instability could disrupt oil supplies and cause oil prices to spike.
This would likely continue until additional production capacity—currently around 6 million barrels per day—could be brought to stabilize the market. Such geopolitical risks, combined with the potential slowdown in global economic growth, could keep oil prices volatile, making it challenging for both oil producers and refiners to plan ahead.
This uncertainty could also increase the risk of market overreaction, with oil prices rising quickly on news of conflict, but dropping again once production ramps up or tensions ease. Consequently, both the oil market and the refining sector will need to remain agile and prepared for unpredictable shifts in demand and supply.
Technical Analysis on US Oil:
Prices are currently fluctuating within a sideways range and may test the 67.30 – 65 support zone before making an upward move. For a meaningful rebound to take place, a close above the 70.25 – 73.10 resistance zone is essential. If this breakout occurs, the price could rise towards the next resistance levels, potentially reaching 75.00 or higher. However, if the price fails to hold above the key support area, it could continue to decline, possibly approaching the 60.00 psychological level. Investors should monitor for breakouts or reversals within these ranges to gauge the market’s next direction.
