BAKU, Azerbaijan, Nov.9
By Leman Zeynalova – Trend:
The victory of Joe Biden in the US presidential election will have a slightly upward impact on oil prices for two main reasons: first, it could lead to a very important plan in order to boost the U.S. economy, which would be good for oil consumption and prices; second, President Biden's main priority will be the fight against the Covid 19 pandemic, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
As the current economic crisis is largely the consequence of the pandemic this priority is also a positive one for the oil sector, the expert believes.
“That being said, President Biden will need the help of the U.S. Congress to get the required budgetary resources for his projects. It is clear that the Democrats will maintain their majority within the House of Representatives but it is not sure that they will be able to control the Senate. If this is not the case the Democrats will have to work with the Republicans in order to reach a compromise and it will not be easy.
For this reason, the impact of the U.S. presidential election on oil prices should be moderate in a short-term horizon.
Another important aspect is linked to the future relationship between the U.S. and Iran. Joe Biden said during the campaign that he would be ready to implement the 2015 Vienna agreement on Iran's nuclear program (JCPOA). This could lead to the lifting or suspension of U.S. economic sanctions against Iran, including extraterritorial sanctions reimposed by the Trump Administration from 2018. These sanctions had a very strong impact on Iranian oil exports and production, which fell dramatically over the past two years. If these sanctions were lifted Iran would be in a position to increase very significantly its oil output in 2021, which could have a bearish impact on oil prices. But Joe Biden added that Iran would have to respect all the provisions of the Vienna agreement. Since the beginning of this year the Iranian authorities have slightly violated some provisions of the JCPOA as regards the volume of enriched uranium stocks, the enrichment rate and the use of some nuclear facilities,” he concluded.
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