Oil falls on Trump’s promise to boost US production

Oil drilling rigs

Oil prices eased today, Jan. 21, after new US President Donald Trump took steps to fulfill his campaign promises to boost his country's fossil fuel production.

International benchmark Brent crude was trading down 0.20% at $79.99 a barrel, at 09:12 am Makkah time. West Texas Intermediate (WTI) crude fell 0.88% to $76.71 a barrel.

Donald Trump was sworn in as the 47th President of the United States on Jan. 20, and one of his first acts was to declare a national emergency in the energy sector to allow his administration to speed up the issuance of oil and gas drilling and exploration permits.

In order to fulfill his election promises to increase his country's production of fossil fuels, he also announced America's withdrawal from the 2015 Paris Agreement, which obligates signatory countries to combat the phenomenon of global warming.

Moreover, the trade risk premium on oil prices has been reduced as Trump did not focus much on his pledges to impose additional tariffs on several countries.

He merely indicated that he was considering imposing 25% tariffs on both Canada and Mexico, and did not mention China or Europe, as he did during and after his election campaign.

But he directed federal agencies to investigate whether any country in the world is following unfair trade practices, Reuters reported.

“There are a lot of variables that investors have not yet digested, given the many headlines and events that have followed Trump’s inauguration,” IG Markets strategist Yeap Jun Rong told Reuters.