Citi forecast on Wednesday that US President-elect Donald Trump’s second term could put downward pressure on oil through 2025, with Brent forecast to average $60 a barrel, mainly due to potential tariffs and of the increase in the supply of oil.
The bank notes that Trump’s influence over OPEC+, which consists of the Organization of the Petroleum Exporting Countries and its allies led by Russia, could prompt the producer group to cut production more quickly, while potentially reducing geopolitical tensions and putting oil back on the market.
Mr. Trump’s policies could favor industry through potential tax incentives for capital investments in exploration and production and could reverse Biden-era increases in royalties, costs for bids minimums and rental rates on federal lands, Citi noted.
Citi also notes that Trump’s policies could have mixed implications for global economic growth, particularly negative for Europe and China, which remain exposed to the risk of tariffs.
This could further harm global oil demand growth, posing downside risks to Citi’s current global oil demand growth forecast of 0.9 million barrels per day for next year.
“However, despite a more pro-oil and gas agenda, its immediate impact on physical oil markets is expected to be limited,” Citi said.
After Republican Trump won back the White House with a landslide victory on Wednesday, Brent crude oil futures settled down 61 cents, or 0.8%, at $74.92 a barrel, while U.S. West Texas Intermediate (WTI) crude lost 30 cents, or 0.4%, to $71.69. [O/R]
Trump’s re-election triggered a major sell-off that sent oil prices down more than $2 per barrel in early trading, while the U.S. dollar rallied, currently hitting its highest level since September 2022.
