Oil prices edged higher as investors remained vigilant ahead of the closely contested U.S. presidential election, coupled with the looming threat of a tropical storm that could disrupt production in the Gulf of Mexico.
West Texas Intermediate (WTI) crude rose 0.7%, settling near $72 per barrel after experiencing a peak increase of 1.7% earlier in the day before paring gains and briefly turning negative. Meanwhile, Brent crude advanced 0.6%, finishing above $75.
The threat of Tropical Storm Rafael has raised concerns about potential disruptions to offshore oil and natural gas production in the U.S. The storm’s projected path could impact approximately 1.7 million barrels of daily output. In response, Chevron Corp. has suspended production in the U.S. Gulf, and Shell Plc is evacuating non-essential personnel from the region.
Adding to the market’s uncertainty, polls indicate that the race between Donald Trump and Kamala Harris remains tight. The election’s outcome is poised to significantly influence U.S. trade, foreign, security, and climate policies, with potential ripple effects across global commodity markets.
Analysts expect a second Trump administration to be more favorable towards the U.S. shale industry while exhibiting skepticism toward renewable energy initiatives. RBC Capital Markets has noted that such a shift could alter U.S. foreign policy, potentially leading to tighter sanctions against Iran while easing restrictions on Russian oil exports.
Since the end of June, the U.S. benchmark has declined by more than 10%, driven by disappointing demand from China and increasing supply from the Americas. This trend has prompted the OPEC+ alliance to delay plans to restore production levels. In response to weak demand in China, Saudi Arabia has also reduced oil prices for buyers in Asia for December, highlighting how sluggish consumption is overshadowing geopolitical tensions in the Middle East.
