Former President Donald Trump has stirred up the oil markets by accusing the Organization of the Petroleum Exporting Countries (OPEC) of manipulating oil prices to favor Vice President Kamala Harris. Trump warned that a potential Harris presidency could spell disaster for the United States.
Allegations Shake Market Balance
Trump’s allegations were made on his social media platform, Truth Social, where he claimed that OPEC nations are deliberately driving down oil prices in anticipation of a Harris victory. This comes at a time when oil stocks are already facing a decline amid speculation about Harris’s potential stance on the oil and gas industry if she were to secure the Democratic presidential nomination.
Market Reaction to Political Speculation
Following President Joe Biden‘s announcement endorsing Harris as a leading presidential nominee after opting out of the 2024 election race against Trump, oil stocks have remained in the red. Notably, WTI Crude has dropped from $78.64 to $75.43 in light of Harris’s nomination for the presidential run, according to Benzinga Pro data.
Oil Industry Impact
Oil giants such as Chevron Corp (CVX), ConocoPhillips (COP), and others like Marathon Oil (MRO), Exxon Mobil (XOM), and EOG Resources (EOG) are currently experiencing declines in their stock prices. Additionally, exchange-traded funds (ETFs) linked to the oil sector, including United States Oil Fund (USO), SPDR Select Sector Fund – Energy Select Sector (XLE), Vanguard Energy ETF (VDE), and iShares U.S. Energy ETF (IYE), are under pressure.
Political Implications on Energy Policy
If Harris were to win the presidency, her administration might prioritize climate policies aimed at reducing carbon emissions and boosting funding for renewable energy projects. This shift could lead to increased compliance costs and stricter regulations for the oil industry, potentially impacting profitability.
Historical Context and Market Analysis
In a historical context, Trump’s rift with OPEC is not unprecedented. Back in April 2018, he criticized OPEC for artificially inflating oil prices, stating that such actions would not be tolerated. A recent report from Citi suggested that a Trump presidency could have a bearish impact on oil prices due to his oil-friendly policies and potential tariffs that might increase oil supply and drive prices down.
Goldman Sachs also warned about the limited options for the next U.S. administration to boost domestic oil supply significantly, citing low strategic petroleum reserves and potential regulatory constraints. The U.S. has been witnessing record oil production, averaging 12.9 million barrels per day in 2023, leading to concerns about a potential oversupply akin to the situation during the 2020 COVID-19 lockdown.