Trump Victory Impacting Dollar Surge and Oil Price Decline
November 06, 2024
2:18 PM
Reading time: 3 minutes
Former President Donald Trump has secured victory in the tight 2024 U.S. presidential race, beating Vice President Kamala Harris. This win has sparked significant movements in global markets, with the U.S. dollar surging and oil prices falling due to the dollar's strength, which makes oil more costly for non-dollar holders.
As of early Wednesday morning, Trump led Harris in key battleground states, including Pennsylvania and Georgia. Fox News projected Trump’s win after he crossed the 270 electoral vote threshold, with victories in states like North Carolina, Wisconsin, and Pennsylvania. This bolstered the dollar’s strength and led to declines in oil benchmarks: WTI Crude dropped 1.71% to $70.90 per barrel, while Brent Crude fell 1.65% to $74.34.
Potential Impact of Trump’s Victory on Oil Markets
Analysts suggest a Trump presidency could bring near-term bullish effects to the oil market. Soni Kumari, a commodity strategist at ANZ Research, noted that a Trump administration might reintroduce or tighten sanctions on Iran, potentially reducing Iranian oil exports and tightening global supply.
Rising Iranian Oil Prices Amid Supply Uncertainty
In related developments, Iranian oil has been trading at its narrowest discount to Brent Crude in five years. Amid fears of potential Israeli retaliation following Iran’s October 1 missile attack, Iran’s crude shipments slowed, with fewer cargoes loaded in early October. The discount of Iran’s Light crude to ICE Brent has now dropped below $4 per barrel, compared to earlier discounts of $5-$6.
The slowed loadings have led to increased prices for Iranian crude, prompting China’s independent “teapot” refiners to adjust their purchases. Iran, facing limited global buyers due to sanctions, has traditionally offered significant discounts to Chinese refiners. But as Iranian oil prices rise and refining margins tighten, China’s independent refiners are expected to lower processing rates toward the end of the year.
Iranian cargo loadings remain low, with few offers for November or December deliveries due to reported logistical issues, driving Iranian crude prices higher for the few buyers still in the market.