(+) Trump Assume the Powers of the Presidency

The US presidential election has come to an end, and Donald Trump has emerged victorious with his team now starting the transition to the White House. How will the oil market react to Trumps second inauguration January 20 and his four years in the Oval Office? Donald Trumps has previously stated that he would like the US president to have more influence on important Federal Reserves decisions. This would jeopardize the US central banks historical independence from political involvement and push presidential and political short-term agenda with easing of borrowing cost while containing inflation.

The newly elected president claimed in a press conference earlier this year that he might have better instincts then the chairman of Federal Reserves in many cases. Trump appointed the Federal Reserve chairman, Jerome Powell in 2018 and Powell has stated that he would reject any proposals by Trump to resign his seat as chairman util his term expires in 2026.

[caption id="attachment_138446" align="aligncenter" width="1024"] (Foto: AP Photo/Andrew Harnik)[/caption] Iranian Sanction During his first term in office Donald Trump reimposed heavy sanction on Iranian crude exports. Pushing the exports down from average of 1.5 million bpd in March 2019 to near 200 kbpd in 2019- 2020. Since then, Iranian crude exports has been on a steady trend upwards with exports hitting 1.5 million bpd on average in October this year.

During the US election, the outcome played a second role with the market focusing primarily on OPEC+ decision the extend their voluntary cuts by another month from December to January. With Trump now re-elected the question remains, if he will reinstate his maximum pressure policy towards Iran, aimed at cutting Iranian oil revenues. Keep in mind the Iranian oil flows has changed since Trumps last presidency, with significant growth of the shadow fleet willing to transport sanctioned crude. Despite weaker demand data coming from China, the worlds biggest importer keeps its healthy appetite for cheap crude and the Chinese independent teapot refiners more than willing to feed their refineries with Iranian crude.

With refiners ready to digest Iranian crude, and able to circumvent the US dollar based financial system, Trump`s maximum pressure against the Islamic republic, might not damage Iranian export much.

[caption id="attachment_138445" align="aligncenter" width="1024"] Chart showing Iranian Crude Exports January 2018- October 2024 in million bpd.(Chart: GEBriefings/Investornytt)[/caption] Drill Baby Drill During Donald Trumps first term as US president, domestic production of liquids grew by four million bpd. The same volume goes for the four years with President Joe Biden at the wheel, despite stricter regulation from the administration. Trumps drill, baby, drill slogan from his first campaign has now been rejuvenated as the coming president is set to impact domestic production. This slogan indicates that Trump believes that the Biden administrations regulation has put a lid on the growth of the domestic oil and gas industry, and him stepping in to office will boost US economic growth with cheap and abundant energy.

Looking a historic EIA data however shows that the Democratic administration has increased production to record highs in the last four years, with a 13.4 million bpd average in August. Domestic production and oil and gas exports over the last two decades has increased steadily regardless of what party is at the oval office. The fear among producers is after years of steady growth a production plateau is getting closer regardless of regulatory interference. US production is still correlated with price and fundamentals.

The market the newly elected president Trump is inheriting looks amply supplied next year, with sanction barrels continuing to find a home and OPEC+ set to release more crude into the market in the coming year(s)