wisepowder: Democrats' Return Will Hamper Oil Prices
Democrats' Return Will Hamper Oil Prices
As the U.S. presidential election approaches, Democratic candidate Biden has outperformed Trump in approval rating by 17%, indicating Trump appears to be a busted flush. Analyses and speculations about various financial trends after Biden takes office have been raging markets. From my point of view, Biden will raise taxes significantly, which may boost the greenback at the expense of U.S. stocks in the short term. All of that said, however, there are few analyses about the impact of Democrats' return on oil prices.To get more news about WikiFX, you can visit wikifx official website.
Notoriously, the Democrats have policies relatively directed against Russia. Thus it is expected that the U.S.-China relations will be improved at the expense of the U.S.-Russian relations after the Democrats come to power. Biden's antipathy to Russia was evident during the first televised debate — he slammed Trump as Putin's puppy. One of the reasons for such antipathy is the Russiagate scandal. The Democrats have been arguing the Russian meddling in the presidential election four years ago, and they may avenge Hillary's defeat once they return to power. The best way for the U.S. to go against Russia is to keep oil prices low, so as to weaken its economy by prevent it making profits from oil. In early 2014, Russia attacked the eastern Ukraine, and soon afterwards, at the end of July, Obama and the EU jointly announced economic sanctions against Russia, mainly hampering the country's oil, military and financial sectors. Oil prices plunged to $26 from $102 in the wake of the news. Now that Belarus is experiencing political turbulence with the support from Russia, it is expected that Biden will take advantage of the situation to battle with Russia after he takes office. In addition, as Biden stands a good chance of rejoining in the Iran nuclear deal, the tension in the Middle East will ease off, which also penalizes oil prices.
Moreover, possible vaccines are still the focus of the market because oil prices may swell once vaccines get flights back on track. On August 10, gold prices slumped by $166 amid the news that Russia registered its vaccine. Such an upbeat news, however, trimmed oil from $43 to $36.1 rather than sending it drastic upsides. I believe the retaliatory rally in oil prices from -$40 to $43.78 is actually a reflection for this account. Therefore, oil prices may not see further rally even hearing the news of economic recovery and resumed flights amid available vaccines. Conversely, oil prices should also be uninspiring even the U.S. policies towards Russia turn extremely hawkish after the Democrats return to power.