Global oil prices fell this week to the lowest level in nearly three years — providing a surprising backdrop to former President Donald Trump’s debate claim that U.S. production would be much higher if he were president.
A barrel of Brent crude settled at $69.19 Tuesday before bouncing back to about $72 on Thursday. Tuesday’s settlement price was the lowest since December 2021, and it came after the oil benchmark traded at more than $90 per barrel earlier this year.
Among the factors in oil’s recent slide: record-breaking U.S. production and questions about demand around the world. The International Energy Agency on Thursday also revised down its projections for oil demand in the coming months, largely based on Chinese consumption and forecasts for that country.
The price of U.S. gasoline is also down. On Thursday, the AAA auto club said the national average price for a gallon of regular was about $3.24 — nearly 60 cents lower than a year ago.
But could oil prices be even lower if Trump was still president? And why are they low now and where are they headed next? What does that mean for the campaign?
Here are three oil themes to watch as the U.S. heads toward Election Day on Nov. 5.
U.S. production, global demand
The U.S. has shattered global oil production records by producing more than 13 million barrels a day this year — more than any country in history, according to the U.S. Energy Information Administration.
That production level nationally has caused prices to fall globally, said Jacques Rousseau, managing director of global oil and gas for the ClearView Energy Partners analyst firm.
“Even though the [U.S.] rig count hasn’t been growing, productivity has been improving, and we also have ample pipeline space,” Rousseau said.
That allows producers to get their product to refiners and overseas buyers more quickly than other oil-producing countries that lack the same infrastructure, he said.
Technological innovations in U.S. oil fields have allowed production volumes to increase, even as employment in the industry has declined and the number of oil rigs in operation has decreased by 30 from about a year ago, according to the Baker Hughes rig count.
At the same time, global demand has been lower than expected, especially in China. There, demand has been about 200,000 barrels a day lower this year than what analysts once projected, said Svetlana Tretyakova, a senior analyst with Rystad Energy, a research firm.
Weaker demand has already led OPEC+ to continue production cuts and postpone some projects, Tretyakova said. She said companies across the world tend to press the pause button on projects when prices begin to fall below certain thresholds.
In the U.S., that tends to be around when the price of a barrel falls below the $70 to $80 mark for both Europe’s Brent benchmark and the United States’ West Texas Intermediate benchmark.
“Prices are how some of them justify projects, which is especially the case for deepwater or shale in the longer term,” Tretyakova said. “In the shorter term, price changes can bring some concerns, but changes over the medium and long term can impact project investment.”
The presidential factor
Little of the record U.S. production can be chalked up to presidential actions, said Al Salazar, director of intelligence at the analytics firm Enverus. He said there only a few options presidents have to meaningfully impact oil prices.
“The first is to dive into your Strategic Petroleum Reserve, which is a nearer term temporary Band-Aid. You can offer incentives like lessening federal royalties (oil companies must pay the government), but that takes a long time to bring production on,” Salazar said. “Or you can do something that would affect demand.”
Facing record high gasoline prices that eventually reached a record high national average of more than $5 a gallon in June 2022, the Biden administration opted to sell 180 million barrels of gasoline from the national Strategic Petroleum Reserve over six months that year to try to keep fuel prices from climbing higher after Russia invaded Ukraine.
That move was been heavily criticized by Republicans, including Trump.
Gasoline prices eventually fell to a weekly average of about $3.782 a gallon by the first week of October 2022, according to EIA. Since those sales, the Department of Energy has purchased 50 million barrels of oil to help replenish the petroleum reserve.
Outside of reserves and incentives to oil companies, presidential administrations can also try to effect demand of gasoline. That could be through things like subsidizing or supporting electric vehicles, but those efforts gained little traction in the United States.
Demand for gasoline in the U.S. has started to plateau due to increased fuel efficiency standards mandated of car manufacturers, but those measures take years to be felt in the marketplace, Tretyakova said.
Trump also made claims in recent weeks that he could cut energy prices in half by calling an “energy emergency.” That could allow his administration to eliminate some bureaucratic hurdles, although details of any plan have remained elusive.
“To cut energy prices in half — that’s pretty general. You can’t move supply as quickly as you can demand, and you can’t encourage people to use half as much,” Salazar said. “I just don’t know how you do that.”
Trump said at Tuesday’s debate that U.S. oil output would be “four times, five times higher” after the past three and a half years if he were still president, but that claim hasn’t been backed up by industry experts.
In response to questions from POLITICO’s E&E News, Trump campaign national press secretary Karoline Leavitt said the U.S. became a net exporter of energy for the first time under the Trump administration “because he cut red tape and gave the industry more freedom to do what they do best — utilize the liquid gold under our feet to produce clean energy for America and the world.”
She wrote in an email that Trump as president would bolster U.S. energy, bring down prices for Americans and “drill baby drill!”
The Harris campaign did not respond to a request for comment.
Most voters don’t understand the nuances of what levers presidents have at their disposal to cause gasoline prices to rise and fall, said Brandon Rottinghaus, a professor of political science at the University of Houston.
“It’s possible some people looking for any kind of economic relief may look for a policy position that may not be achievable,” he said.
Where oil prices may go from here
Analysts with EIA and elsewhere expect both U.S. and European benchmark oil prices to linger in the range of $70 to $80 per barrel for several reasons.
First, OPEC+ has again prolonged its production cuts, and oil consumption globally typically ticks up in the second half of the year compared to the first half, said ClearView’s Rousseau.
“Demand in the world of oil is going to be greater than supply by a little bit, about 200,000 barrels, drawing down inventories,” he said, speaking about the later part of 2024.
There also are geopolitical issues swirling around production, with certain wells being shut in Libya and some production being stopped in Colombia. Plus, U.S. production took a hit as Hurricane Francine moved through the Gulf of Mexico this week — an example of the uncertainty that comes with hurricane season.
As of Thursday, more than 730,000 barrels of oil a day has been idled in the Gulf of Mexico as a result of the storm, the equivalent of about 42 percent of the Gulf’s oil production capacity tracked by the Bureau of Safety and Environmental Enforcement.
Oil prices in the $70 to $80 range may not necessarily give Harris a bump, said Rottinghaus at the University of Houston. Instead, the higher prices seen at the pump earlier this year — and even in the past few years — could stick in voters’ minds as Trump tries to tie Harris to increased costs for consumers during the Biden administration.
Rottinghaus said people whose pocketbooks were affected by higher gasoline prices and inflation may be less swayed by the numbers lit up at their local gas stations this week and even leading up to Election Day.
“People economics perceptions are severely lagged. Although prices at the pump might be lower, people still have a sticky perception of what gas prices are,” Rottinghaus said. “For incumbents running for reelection, that means those perceptions may be running behind where gas prices are currently.”
