Goldman Sachs and Citigroup warn: If Trump takes office, oil prices are "at risk"!
Goldman Sachs and Citigroup have released reports warning that Trump's presidency could lead to a drop in oil prices. Analysts at Goldman Sachs stated that the trade tariffs implemented by Trump could be bearish for oil prices, with an expected decrease of $11-19 per barrel. Citigroup analysts pointed out that Trump's "trade, oil, and natural gas policies" and their impact on OPEC + producers' alliance could bring bearish sentiment. Additionally, Trump's reinstatement of sanctions on Iranian exports could also push oil prices higher. Despite Trump's pledge to increase U.S. oil production, major banks believe that its impact will be limited
Some Wall Street major banks believe that if former US President Trump wins the election, oil prices may fall.
Goldman Sachs and Citigroup stated in their respective reports that although the Republican candidate's promise to increase the country's crude oil production may not be realized, the trade tariffs implemented by Trump may be bearish for oil prices.
A team led by Goldman analyst Daan Struyven wrote that if tariffs significantly impact the global economy, oil prices could fall by $11-19 per barrel next year. They stated that Trump's return to the White House could bring "downside risks" to the expected range of $75 to $90 per barrel for crude oil prices.
The bank's economists studied a scenario in which Trump imposes a 10% comprehensive tariff on all imported goods, triggering other countries to retaliate with similar tariffs.
Citigroup analysts, including Eric Lee, wrote, "The Trump administration mainly brings bearish factors," pointing out Trump's "trade, oil, and natural gas policies," as well as his impact on OPEC + producers alliance.
These two banks also added that if Trump resumes his previous crackdown on Iranian exports, it could also push up oil prices. The former US president had used a "maximum pressure" strategy in an attempt to renegotiate a nuclear agreement with Tehran, but it ended in failure.
Goldman Sachs predicts that during Trump's second term, Iran's production could drop by about 1 million barrels per day, nearly one-third of its production. However, other oil-producing countries in OPEC + may try to fill this gap, limiting the increase in oil prices to around $9 per barrel.
Despite Trump's pledge to increase US oil production, these major banks expect this to have no substantial impact on the already record-high production levels.
According to Citigroup, the most likely choices for the Trump administration include increasing leasing and land auctions, as well as lifting the leasing ban on the National Petroleum Reserve in Alaska.
The bank stated, "Although Trump seems to have a more oil and gas-friendly agenda than the Democratic candidate, his impact on the physical oil market may be limited. Compared to regulatory factors, broader market conditions have a greater constraint on the growth of US oil and gas production."
Earlier this year, Citigroup predicted that Trump's victory would enhance the bank's confidence in oil prices falling to $60 per barrel by 2025. In contrast, analysts at Sanford C. Bernstein in January forecasted that if the Trump administration squeezes Iran's oil exports, oil prices could strengthen