Oil prices declined on Wednesday, with Brent settling down 0.81% at $74.92 per barrel and WTI down 0.42% to $71.69. Investors weighed a strong U.S. dollar and concerns around foreign-policy implications of President-elect Donald Trump’s re-election. The initial market response saw a sharp drop as the dollar surged to its highest since September 2022, making oil more costly for international buyers.
While a strong dollar initially triggered selling, analysts suggested this was an overreaction. Price Futures Group analyst Phil Flynn noted that investors refocused on the supply-demand balance, viewing Trump’s potential policy stance—such as sanctions on Iran and Venezuela, or support for Israel—as potential constraints on global oil supply. A renewed crackdown on Iran, an OPEC member with around 3.2 million bpd of production, could have bullish implications, despite Iran’s increasing ability to bypass sanctions.
Geopolitical instability in the Middle East remains a supportive factor for prices, according to analysts like Andrew Lipow, with possible oil supply disruptions should tensions rise further. However, larger oil market trends—such as OPEC+ production influence and weaker demand—continue to shape long-term price direction, according to Mukesh Sahdev at Rystad Energy. U.S. crude stocks rose by 2.1 million barrels last week, surpassing analyst forecasts, adding near-term pressure to prices amid ample supply.