Beyond contesting the election results, the Trump administration has hardly been idle in what could be its final months. President Trump has ordered the auctioning of oil drilling rights in the Alaskan Wilderness. The challenge for big-oil is likely to be the potential consumer backlash if those rights are won, as well as a world that will still be awash in black gold, even after Covid-19 has been overcome.
The administration announced the potential blacklisting of 89 Chinese companies associated with the Chinese military today, suggesting that no thaw in US/China relations will be happening anytime soon. Ironically, the domestic aviation sector could well suffer as a result. Honeywell, Eaton and General Electric are among the American companies that may now potentially miss out as suppliers of potentially thousands of aircraft orders in China in the future.
It is somewhat ironic that President Trump’s potentially greatest foreign policy triumph could happen in the last days of his presidency. Israeli Prime Minister Benjamin Netanyahu secretly flew to Saudi Arabia over the weekend with US Secretary of State Mike Pompeo to meet with its de facto ruler, Crown Prince Mohammed bin Salman. Establishing diplomatic relations between the two states would be a crowning achievement, following similar breakthroughs with the UAE, Bahrain and Israel. It would also be modestly market positive, though the grouping, nurtured by the United States, has a “my enemy’s enemy is my friend” look about it; that common enemy, of course, being Iran.
Should that come to pass in the next two months, it could complicate, and possibly derail, attempts by the United States to re-engage with Iran. That would be positive for oil prices, as it likely means Iran sanctions will remain and millions of barrels of Iranian crude would remain, officially at least, on the international markets.