Oil prices edged higher on Thursday, reversing a post-election sell-off as markets weighed potential supply disruptions from the re-election of Donald Trump and an intensifying hurricane in the Gulf of Mexico.
Brent crude oil futures rose by 26 cents (0.35%) to $75.18 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 16 cents (0.22%) to reach $71.85.
The Trump administration’s anticipated “maximum pressure” policy toward Iran and Venezuela is raising concerns about tightened global oil supply. Reimposing stringent sanctions on Iranian oil could potentially slash exports by up to 1 million barrels per day, according to Energy Aspect analysts, though the challenge remains in restricting Iran’s sales to China. Similarly, Trump’s hardline stance toward Venezuela could re-establish the limitations briefly lifted by the Biden administration.
Analyst Tony Sycamore from IG noted that these risks from a Trump presidency, combined with the threat of production disruptions from Hurricane Rafael in the Gulf Coast, “more than offset the post-election impact of a stronger U.S. dollar and unexpectedly high U.S. inventories.” The hurricane, which reached Category 3 status, has led to a production shutdown of about 17%, or 304,418 barrels per day, of crude oil in the Gulf of Mexico, as reported by the U.S. Bureau of Safety and Environmental Enforcement.
Despite an initial $2 drop in oil prices following Trump’s victory, the market managed to pare losses, closing Wednesday with only moderate declines. Brent settled down by 61 cents, and WTI fell by 30 cents as the U.S. dollar reached its highest level since September 2022, impacting oil’s value.
Adding to the market’s volatility, U.S. crude inventories rose by 2.1 million barrels last week, reaching 427.7 million barrels—almost double the forecasted increase. Elevated inventories typically pressure oil prices, though the combined effect of political and environmental risks appears to be bolstering oil’s near-term recovery.
