‘America first means commodities second’: Oil and gas prices will tank under a Trump presidency, BofA strategist says

Oil and gas prices are set to fall amid an onslaught of steep tariffs under Donald Trump, according to Bank of America strategist Francisco Blanch.

Blanch says the president-elect’s proposed tariffs will likely curb global trade, driving down oil and gas prices in the process.

“America first means commodities second, and I think we kind of start from that point,” he said in a Monday interview with Bloomberg Television.

Trump has floated proposals of sweeping tariffs of 10% to 20% on all countries, with the exception of China, where the US would impose steeper duties of 60%. As those tariffs heighten trade tensions, that could slow economic growth and lead to higher inflation and interest rates, dampening demand and prices, Blanch’s comments suggest.

That could have an impact on production, too, Blanch says.

In theory, Trump’s deregulatory stances and pro-fossil fuel views should boost production. Throughout his campaign, Trump promised to lower energy prices by boosting US oil production, saying, “We will frack, frack, frack and drill, baby, drill,” at a rally in Detroit last month.

“I will cut your energy prices in half within 12 months,” he added.

But if prices are lower amid sweeping tariffs, that could mean production slows, too, as producers see less incentive to accelerate drilling, Blanch says.

“In America, prices determine how much output producers ultimately pull out of the ground, and I think the bigger risk to prices really is coming from tariffs. We have potentially a trade war here,” he said, adding that trade war is the main downside risk to demand globally.

US oil production is also already historically high, reaching 13.4 million barrels a day in August to hit a new all-time monthly high.

There are also some upside risks to commodity prices, Blanch acknowledges.

He points to geopolitical tensions, including those in the Middle East and Ukraine. During his first term, Trump employed strict sanctions on Iran and Venezuela, and with Marco Rubio appointed as Secretary of State, that could bring such policies back, Blanch says.

“He’s an anti-Iran, anti-Venezuela hawk. I think that could have an impact,” he said, implying that stricter sanctions on those countries could drive up prices.

“Whatever happens to those geopolitical events that we’re going through right now I think will also determine the path,” he added.