Oil prices declined by up to 2% on Wednesday after experiencing gains in the previous two days. This drop was mainly influenced by a notable surge in the U.S. dollar following projections that Republican Donald Trump had won the U.S. presidential election, defeating Democrat Kamala Harris. This projected outcome, which implies significant potential shifts in U.S. policy, affected market sentiment and investor confidence, contributing to downward pressure on oil prices. Additionally, U.S. crude inventories rose beyond expectations, signaling a surplus that added further weight to the drop.
As of 0710 GMT, Brent crude futures had fallen by $1.17, or 1.5%, to trade at $74.36 per barrel, while West Texas Intermediate (WTI) crude declined by $1.11, also 1.5%, reaching $70.88 per barrel.
A stronger U.S. dollar typically raises costs for international buyers, as commodities like oil are priced in dollars, making them more expensive for countries using other currencies. The anticipated Trump administration policies could also have broader economic implications, especially with respect to China. China, as the world’s largest importer of crude oil, may see reduced demand if economic tensions rise or trade relations shift, further pressuring oil prices globally. These developments highlight the interconnected nature of currency strength, commodity pricing, and global demand dynamics in response to political events.
