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Highlights
- Oil prices rise with approaching US election and Gulf storm impacts
- Tropical storm disrupts Gulf production; major firms take precautionary actions
- Close presidential race adds market uncertainty with potential policy shifts
Oil prices have seen a slight rise as market factors converge, including the US presidential election and a tropical storm forecasted to affect oil production in the Gulf of Mexico. West Texas Intermediate (WTI) gained 0.7%, ending near $72 a barrel, while Brent crude rose by 0.6% to settle above $75. These gains followed earlier peaks in the trading session, though prices saw slight reversals amid shifting market sentiment.
Tropical storm Rafael is expected to impact the Gulf of Mexico, where the storm is projected to disrupt around 1.7 million barrels of daily output. To mitigate potential production losses, companies have started implementing precautionary measures. Chevron (NYSE:CVX) suspended its Gulf production as a preventive action, and Shell (NYSE:SHEL) began evacuating non-essential personnel from its platforms. The storm's intensity and path are being closely monitored as any significant disruptions in the Gulf region could tighten oil supply and further influence prices in the short term.
Adding to the market’s uncertainty, the US election has entered its final stages with a notably close race between incumbent Donald Trump and challenger Kamala Harris. Current polling data suggests a narrow gap, leaving markets braced for the election's outcome and its potential impact on the energy sector. A second term for Trump could signal a more supportive stance for the US shale industry and a more cautious approach toward renewable energy investments. This policy direction could also imply potential shifts in foreign policy, with possible sanctions targeting Iran and reduced constraints on Russian oil exports, factors that may influence global oil trade dynamics.
While RBC has noted the potential for foreign policy shifts in response to the election outcome, the market is likely to react in real time as results unfold. The combined effect of the election and the storm's impact on Gulf production has created a temporary lift in oil prices, though further movement will likely depend on how both these factors develop in the coming days.
As these events unfold, the oil market remains volatile, reflecting heightened geopolitical and environmental sensitivities. Market participants are watching closely as developments may shape near-term strategies for production and pricing in the energy sector.
