What is the Biggest Oil Price Risk from a Biden Win?

The biggest risk to oil prices from a Biden administration would be reconciliation with Iran.

That’s according to a new research note from investment bank Jefferies, which outlined that rapprochement with the country would potentially bring two million barrels per day of additional supply into the market.

The note outlined, however, that a potential partial offset on supply could come in the form of tighter regulations on the U.S. industry, adding that a moratorium on drilling permits on federal land would be the easiest to quickly implement.

“To mitigate this risk companies are filing for permits as quickly as possible,” the research note stated.

“A federal permit is valid for two years after issuance, with the ability to extend another two years a rubber stamp in the past but not necessarily the future,” the note added.

“The risk is greatest in the New Mexico Permian, the Gulf of Mexico and Alaska,” the note went on to say.

Oil and gas company Total was highlighted in Jefferies’ note as a potential “Biden victory winner” amongst the supermajors, with only two percent of its crude production sourced in the United States.

Highlighting the gulf between the Biden and Trump administrations, the U.S. State Department revealed Wednesday that the secretary of state Mike Pompeo is traveling to New York City to notify the United Nations Security Council that the U.S. will initiate the process to restore U.N. sanctions on Iran.  

The U.S. presidential election is currently scheduled to take place on November 3, although U.S. President Donald Trump raised the question of delaying the election in a Twitter statement posted on July 30.

With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history. It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???

— Donald J. Trump (@realDonaldTrump) July 30, 2020

Last month, Biden unveiled a clean energy plan that will put the U.S. on an “irreversible path” to achieve net-zero emissions, economy-wide, by no later than 2050, and vows to create millions of “good-paying jobs” that provide workers with the choice to join a union.

To see what oil groups thought of the new plan, click here.

To contact the author, email andreas.exarheas@rigzone.com