Oil prices dip amid speculation on Trump’s energy agenda

Oil prices dipped on Monday and WTI price dropped from $79.2 per barrel to $77.5 per barrel. If oil prices retreat, they may encounter support near $74.2 per barrel, while resistance may be found near $81.0 per barrel.

Concerns of a broadening conflict in the Middle East have been boosting oil prices in the past year. Reports that Israel and Hamas have reached a ceasefire agreement put pressure on oil prices last week. A ceasefire deal in the Gaza area will likely halt Houthi militia’s attacks on ships in the Red Sea. The attacks have been raising supply concerns for some time now, boosting oil prices, but concerns over a break in the oil supply chain receded after the announcement of the deal, putting pressure on oil prices.

Oil prices have been gaining strength these past few weeks as cold weather in the US and the EU raises oil demand. In addition, supply concerns have been driving oil prices up.

Donald Trump’s Presidential inauguration at the US capitol attracted market attention on Monday. Trump was sworn in as the 47th president of the United States with the whole world anxiously expecting his inaugural address to the US nation. 

Oil prices dipped on Monday amid speculation over Trump’s energy agenda. Trump has vowed to declare a national energy emergency and start drilling for oil immediately to build up US strategic reserves. 

Increasing Western sanctions against Russia and Iran have been paying off, limiting the oil output of these countries. Outgoing US President Joe Biden has imposed strict sanctions on Russian oil exports. Incoming US President Donald Trump, however, may ease restrictions on Russia’s oil exports in exchange for an agreement to end the war in Ukraine. Trump, on the other hand, is also expected to reinforce restrictions on Iran's oil exports. 

OPEC+ has announced that it will extend its voluntary production cuts until the end of the first quarter of 2025, however. Oil prices have been under pressure and the cartel is limiting production in an attempt to raise oil prices. 

Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve cut interest rates by 25 basis points at its latest meeting to a target range of 4.25% to 4.50%.  In his press conference after the policy meeting, Fed Chair Jerome Powell delivered a hawkish message, emphasizing the need to be cautious about further rate cuts.

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Written by:
Myrsini Giannouli

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