The GERM Report

-Biden to go green

-But he faces a tough battle in the international arena

Prospects that President Joe Biden would move swiftly on a new round of stimulus pushed crude oil prices higher in a Wednesday session. In contrast to disturbing scenes of supporters of former President Trump, inaugural events were largely formal and benign. Biden is widely expected to push for a greener agenda and limit shale activity on federal lands. He faces, however, a full plate of geopolitical issues that could keep tailwinds blowing in the sails of crude oil.

After a 2% rally in the pre-inaugural session, Brent crude oil was just barely in positive territory on Wednesday, moving up a fraction of a percent as of 2 p.m. ET to trade at $56.02 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, traded higher, up a half percent to hit $52.38 per barrel.

We know Biden’s agenda by now; nix the Keystone XL oil pipeline, limit hydraulic fracturing and go hard on a green energy agenda, starting first by rejoining the Paris climate accord. Urging the new White House leadership to get to work for American taxpayers, the heads of the U.S. Chamber of Commerce were ready with a message of support.

“There won’t be consensus on every issue, and the Chamber will fight vigorously against policies that will hinder—rather than help—a widespread economic recovery,” the message read. “But just because we may have different opinions doesn’t mean we are on different teams.”

The reflected not only a departure from the combative tone of former President Trump, but also of the note of unity struck by Biden in his inaugural address to the nation. Apart from the immediate exuberance that would normally mark a new beginning, the Biden administration faces a tough task to reset international affairs.

Paul Sheldon, a geopolitical advisor at S&P Global Platts, said the inauguration of Joe Biden represents a “seismic” shift on the American political landscape.

“President-elect Biden will lead US foreign policy on a diametrically different trajectory, a dynamic which skews geopolitical oil market risks to the bearish side for the first time since 2015,” he stated in a report emailed to The GERM Report.

First and foremost would be the potential for a reset in relations with Iran and Venezuela. If Biden scales back sanctions on those OPEC members, Platts estimates as much as 1 million barrels per day could be added to the market by the end of the year.

Among the potential bullish trends for Biden would be continued unrest in Libya, further tensions with Iran, which holds president elections in June, and further acrimony with Russia, which would arguably face a tougher adversary in Biden then it did under Trump.

Elsewhere, the muted gains for crude may reflect anticipation of oil and product inventory data from the United States. In a separate note, Platts estimated that commercial crude oil inventories declined by 2.5 million barrels during the week ending Jan. 15. That would be the sixth week in a row if the forecast is accurate. The draw corresponds with a slight uptick in U.S. crude oil exports to about 3.03 million bpd.