Oil prices rose on Thursday after an initial drop following the U.S. presidential election. Investors remain uncertain as they weigh supply risks and global economic factors. A possible Trump presidency and a looming hurricane in the Gulf of Mexico worry oil traders. These developments have outweighed the effect of a stronger U.S. dollar and rising U.S. oil inventories.
Despite the sell-off triggered by the election results, Brent crude and WTI oil prices have recovered. At 0125 GMT, Brent rose 26 cents, or 0.35%, to $75.18 per barrel. Meanwhile, WTI crude oil prices increased by 16 cents, or 0.22%, reaching $71.85 per barrel.
The initial drop in oil prices occurred after the U.S. election triggered uncertainty about oil supply risks under a possible Trump administration. Additionally, fears that sanctions on Iranian oil and Venezuelan oil could disrupt global oil production weighed on the market. However, these concerns about future oil supply disruptions pushed oil prices back up.
As Hurricane Rafael intensifies in the Gulf of Mexico, energy companies have shut down roughly 17% of U.S. oil production. The storm is now a Category 3 hurricane, forcing producers to halt drilling operations. According to the U.S. Bureau of Safety and Environmental Enforcement, companies have suspended 304,418 barrels per day of oil production. This disruption in production has further heightened concerns about the impact on oil prices.
The storm’s potential to limit production is driving oil prices higher as traders fear more supply shortages in the short term.
During his first term, Trump imposed tougher sanctions on Venezuelan oil. These sanctions were briefly relaxed by the Biden administration, but now they are being reinstated. The market is closely monitoring how these sanctions will affect oil prices in the coming months.
In addition to these external factors, U.S. crude inventories have risen significantly. According to the U.S. Energy Information Administration (EIA), crude stocks increased by 2.1 million barrels to 427.7 million barrels in the week ending November 1. This figure exceeded expectations of a 1.1 million-barrel increase. Despite the growing inventories, oil prices remain high due to ongoing supply risks, geopolitical tensions, and weather disruptions.
For further insights on related topics, visit our Prex Blogs
Oil prices rise as investors react to the U.S. election, supply risks, and Hurricane Rafael. Global disruptions and sanctions
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