Oil Under Trump: War and Peace, but Mostly Deregulation

In anticipation of a deregulatory regime under Trump that will increase both demand and supply for fuels, and remove deadweight costs, we are lowering our projected trading range for Brent to $60 to $80, while at the same time turning positive on the lagging US energy sector. Wright for Energy secretary is the perfect pro-growth choice. CAFE standards will be revised down, effectively ending the electric vehicle mandate. A black swan is that Trump will “settle” the Ukraine conflict rapidly, and Russia can rejoin world energy markets, but with little effect on prices. A widening conflict in the Middle East as Trump gives Israel broader permissions to defeat Iranian terror is more of a threat. Trump will enforce existing sanctions on Iran, sharply reducing their crude exports, but this will easily be compensated by production increases by other OPEC members, especially Saudi and UAE.