Oil prices fall and majors’ stocks up as Trump secures return to White House
Markets worry that Trump’s return to White House may lead to tariffs hampering growth and affecting oil demand
Oil prices trended lower during overnight trading while major oil stocks opened on the up as Donald Trump secured a return to the White House in the US presidential election.
The Republican candidate won Tuesday's election after surpassing the 270-electoral college vote threshold required to secure the presidency. Speaking in Florida ahead of the final result, Trump declared a “magnificent victory”.
Reacting to the projections, oil and commodity prices have posted widespread losses.
The Brent crude futures contract was down 1.2% in European trading to $74.6 per barrel, as of 11.28am on Wednesday UK time, while the WTI futures contract had lost 1.3% and was trading at $71.1 per barrel at the same time.
Ole Hansen, Saxo’s head of commodity strategy, said in a note that tariff concerns during a Trump presidency, which are adding to an already bearish outlook for oil in 2025, have driven prices down.
“An increase in tariffs may slow global economic growth, thereby lowering demand for energy,” Hansen said.
“The possibility that a tit-for-tat global trade war could dampen (oil) demand and add strain to an already weak market outlook,” he added.
Overnight trading saw losses across the commodities sector on tariff and trade concerns; this has hit metals such as copper and iron ore, and grains such as soybeans.
Preliminary election results drove the US dollar sharply higher, with currencies including the Mexican peso, the Japanese yen, and the euro suffering the biggest setbacks during Wednesday trading.
“The prospect of relatively higher US interest rates and weaker world trade growth under a Trump administration is a bearish one for emerging market currencies,” ING commented.
On fears of inflation-stoking policies under the next presidency, Russ Mould, investment director at AJ Bell said in a note: “The impact of higher inflation on corporate profit margins, and how interest rates might not come down as fast as previously expected, are real risks for investors to consider once the dust settles.”
Major oil stocks, meanwhile, posted increases.
During pre-market trading, ExxonMobil and Chevron were up more than 3%.
Shares in European majors BP and Shell increased 1.5% and 0.3%, respectively as of Wednesday morning, while TotalEnergies increased 0.5%.
During his election campaign, Trump repeatedly talked down the energy transition and spoke of cutting back on green policies and unleashing new drilling for hydrocarbons.
Meanwhile, European renewable energy stocks plunged, with Vestas, Nordex and Orsted shedding 11%, 6% and 10% at market open, respectively.
“Investors who thought Kamala Harris would win might have gone all-in on renewable energy stocks given her pro-green stance, and that trade is now unwinding. Shares slumped in wind specialists Oersted and Vestas Wind Systems,” commented Russ Mould, investment director at AJ Bell.
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