Friday, February 24, 2017

Oil industries cautions on Trump's next actions

US President Donald Trump has promised lower corporation tax, oil sector deregulation and tax incentives on exports.

Oil bigwigs are trying to figure out strategies to deal with the impact that Donald Trump's blizzard of plans to boost the US industry will have on the world market.

If Trump keeps his promises on lower corporation tax, oil sector deregulation and tax incentives on exports, it could lead to an influx of US crude oil - something which may challenge the price rises of the last six months after two years of weakness.

At the International Petroleum Week conference in London, the new US administration's policies were cited as one of the most influential factors on oil in 2017, along with growth of the Asian market and tensions in the Middle East.

Abhishek Deshpande, an analyst at French corporate and investment bank Natixis, told AFP that even if Trump's policies were imposed, they would not necessarily be favourable to the US petrol industry.

"The oil producers may look at it positively, as it will make the US crude oil jump higher. But for the rest of the US, the refiners would feel the pain, and possibly pass on the impact to the public," he said.

"For the rest of the world, the Middle East would have to find new markets, which means more crude to sell," potentially lowering the price, he added.

Energy Security Analysis president Sarah Emerson also warned that Trump's ideas could be difficult to implement.

"All of that is working against the huge question about deficit, and some Republicans and all the Democrats would have to object," she said. - AFP

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