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Oil in Global Economy Series: Biggest threat to oil price recovery in short to medium term

If you ask, what is the biggest threat to oil price recovery, especially in the short to medium term? The answer will be just two words; Donald Trump.

The actions taken up by the US President Donald Trump since his inauguration, just little more than a week ago may disgust you or make you thrilled with joy but it is very much clear that he meant his campaign promises, almost every word. No one should have a doubt about that. So, why he is a threat?

Do remember what he said during his campaign with regard to energies; he will tear up unnecessary regulations in the sector and open up the full potential of the energies in the United States.

It is also clear that one of his policy cornerstones is reducing trade deficit of the United States and one of the easy ways to do that would be to reduce the petroleum deficit and tap the vast resources within the country. He has already signed executive orders with respect to two key pipelines; Dakota access and Keystone XL. If excessive regulations are removed, the US oil production can rise very sharply and lead to a very big surplus in the oil market.

But the catch is, nobody knows how much Mr. Trump will be able to achieve in his energy promises and unless that front gets cleared, uncertainties would remain.

WTI is currently trading at $52.7 per barrel and Brent at $2.7 per barrel premium.

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