Biden may bring a pleasant surprise to the global oil market

Since the start of his election campaign, the name of US President-elect Joe Biden has been linked to negative expectations of the global oil market, amid the policies he announced regarding cutting carbon emissions and orientation of renewable energy sources through a plan of approximately two trillion dollars which is expected to be implemented over the next 10 years.

However, global investment bank Citi believes that the US president-elect could represent good news for global oil markets, with expectations that commodity prices will rise during his reign of the world’s largest economy, which is expected to rise. start in January if things go normally. Market surveillance.

The bank said in its note that markets are currently focused on Biden’s expected policy towards Iran, which could result in Iranian oil returning to the market if the United States reverts to the nuclear deal, which would add more supply to an already crowded market.

The research note indicates that the current volume of Iranian oil exports stands at over one million barrels per day, which exceeds market expectations of around 450,000 barrels.

Citi analysts doubt that a possible new deal with Iran will quickly add more oil to the market, with hopes that Iranian oil exports will not increase if a deal is reached less than a year ago. year.

“The market will not suddenly face an expected Iranian supply of 2-2.5 million barrels per day,” the memo added.

The US investment bank believes that reaching a deal with Iran will not be as easy as hoped, with a dramatic change in the nature of Tehran’s relations with the United States and other countries since 2016.

“The negotiations should be between two parties who have the desire to negotiate … Iran’s 2021 presidential elections are among the many obstacles to a speedy return to the negotiating table,” the memo reads.

“As a result, we believe Iranian oil production is unlikely to increase by more than 500,000 barrels per day in the first year of Joe Biden’s period,” she added.

The memorandum believes that Saudi Arabia and Russia will step up cooperation during the Biden period to ensure balance control in the world oil market, which would support prices in the coming period.