(Bloomberg) -- The world’s oil traders descended on London this week, and in the bars and hotels of the city’s Mayfair district they were getting re-accustomed to checking their phones for what Donald Trump might say next.
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Since returning to the White House, the president has railed against the OPEC+ alliance, pledged to slap tariffs on some of America’s largest energy suppliers, and made initial efforts to end the war in Ukraine.
As the outlook for crude was discussed over dinners and canapes during International Energy Week, Trump dropped conflicting comments on his dealings with Volodymyr Zelenskiy and plans to penalize Canada and Mexico. It’s a rapid-fire approach that has caused a cloud of uncertainty for traders handling millions of barrels a day of oil supplies, with a single cargo worth tens of millions of dollars.
Brent futures have been swinging between $70 and $85 a barrel since October, and while more clarity may emerge in the coming weeks, for now the barrage of policies is making the market too uncertain for many to trade confidently.
“There’s analysis paralysis in terms of what’s coming out of Washington,” Helima Croft, Chief Commodities Strategist at RBC Capital Markets said at a Bloomberg event on Wednesday. “I hear a lot of ‘we don’t know’.”
There were, however, some common themes within Trump’s agenda that dominated conversations. Top of the pile was his plan to end the war in Ukraine.
Before the conflict, Russia was one of Europe’s largest suppliers of crude, but its one-time trade partner all but stopped buying after the war started. Since then, shipments have been re-routed, driving millions of barrels a day to India and China instead. Fuel cargoes have been dispersed to myriad other locations, too.
US-Russia Deal
As Trump pledges to bring down living costs, many traders were of the view that the US may even step in to buy Russian oil before Europe does — if the conflict does come to an end.
“You might have the slightly ironic situation where America is taking Russian oil before the Europeans do, in a large scale way, because of the political attitude towards it,” Ben Luckock, global head of oil at Trafigura Group, said in a Bloomberg TV interview. “Europe, in my opinion, is probably going to be slower to take the oil back.”