OPEC’s job to support oil prices is now facing tough challenges with Donald Trump winning the U.S. presidential election.
The 14-country oil-producing cartel will probably have to fight a sourer outlook for the global economy and weaker demand for crude, in addition to the prospect of increased U.S. oil production.
OPEC’s internal dynamic could witness a change, with Trump stating earlier that he shall tighten policies on Iran just as oil companies begin slowly to return to the Islamic Republic.
“Buckle up your seatbelts for a more turbulent and uncertain global economy that is ahead,” Pulitzer Prize-winning U.S. oil historian Daniel Yergin, vice-chairman of the IHS Markit think tank, told Reuters. The latter saw that the outcome of the U.S. elections will add to the challenges for the oil exporters.
Oil prices fell almost 4 percent early on Wednesday but recovered to trade up slightly at around $46 per barrel by 1055 GMT LCOc1 [O/R].
OPEC will meet on Nov. 30 in an effort to curtail output and reduce the global oil glut that has seen prices more than halve since 2014.
OPEC sources said they expected oil to remain weak in the days and weeks ahead due to worries about the global economy and uncertainty about Trump’s policies for the Middle East.
Trump has promised to double U.S. economic growth but also pledged protectionist trade policies.
“This will have huge negative implications for Asia, given how much their GDP is tied to trade with the U.S. Hence it is negative for growth and oil demand, at least due to the uncertainty that Trump creates,” said Amrita Sen, of the think tank Energy Aspects.