Geopolitics always affects oil and gas.
That’s what Corey Ranslem, the CEO of Dryad Global, told Rigzone when asked if geopolitics will affect oil and gas next year.
“The conflict within the Middle East, the Russia-Ukraine war, along with a shifting global political landscape, will continue to have a major effect on the oil and gas industry,” Ranslem told Rigzone in an exclusive interview.
“Right now, it is too early to tell what is going to happen, but there are a number of factors in play as we now digest the results of the U.S. presidential election and a new budget proposed within the United Kingdom,” he added.
In a separate exclusive interview, Aaron Roth, principal and head of federal strategy at security risk management company the Chertoff Group, told Rigzone that “the world now awaits … [Trump’s] impact on the global stage, and the oil and gas markets will be top of mind”.
“Given the former President’s past record, this is likely good news for oil and gas demand in the United States,” he said.
“President Trump will undoubtedly advocate for U.S. energy independence which could lead to the rolling back of regulations, U.S. energy exploration, and energy infrastructure expansion,” he added.
“Additionally, Trump’s international position during his last term led to competitive stances with OPEC to drive U.S. production and heavy-handed sanctions on countries such as Iran and Venezuela,” he continued.
“Overall, there is likely to be some volatility depending upon Trump’s foreign policy and the prospects of tariffs,” Roth went on to state.
In a BMI report sent to Rigzone late last week by the Fitch Group, BMI analysts said Trump’s impact on market fundamentals will likely be limited, adding that his impact on the international stage will likely be greater.
“In the short term, Israel may be emboldened to increase the intensity of its attacks to strengthen its hand ahead of any future ceasefire negotiations,” BMI analysts noted in the report.
“Trump is also more likely to support attacks on critical Iranian infrastructure, which would reintroduce larger risk premia,” they added.
“We also expect him to adopt a more hawkish stance on Iran and pursue tighter oil sanctions enforcement, although we do not believe he will succeed in materially disrupting trade between Tehran and its independent buyers in Mainland China,” they continued.
In that report, the BMI analysts said Trump’s foreign policies will have conflicting impacts on oil prices.
“While these former factors will lend support to Brent, a more combative approach to relations with Beijing and rising global trade tensions could weigh heavily to the downside,” they said.
“In any case, the key determinant of price action will be OPEC+ and the extent to which extensions of the group’s cut deal are sufficient to offset robust gains in non-OPEC+ supply growth next year,” they added.
The BMI analysts stated in the report that they currently expect the group to carry its cuts into the new year.
A BofA Global Research report sent to Rigzone last week stated that the oil market has been pushed and pulled in the second half of this year by bullish geopolitical risk and the threat of bearish 2025 balances, underpinned by slower demand growth and accelerating non-OPEC supply.
“Brent crude oil prices swung from a low of $68 in early September to a high of $81 per barrel in early October and have recently settled into the middle of the range near $74, a level that seems fair given all the uncertainty,” the report added.
“Geopolitical tensions between Iran and Israel remain high, with no disruptions to show, and while refining margins hint at weak oil demand, inventories are below pre-Covid levels and not yet rising meaningfully,” it continued.
To contact the author, email andreas.exarheas@rigzone.com