Insights

ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win

If the polls are to be believed – and that’s a big IF – ASX energy stocks like the Woodside Petroleum Limited (ASX: WPL) share price could be in for a tougher 2021.
The post ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win appeared first on Motley Fool Australia. –

man holding up barrel of oil against rising chart representing rising oil search share price

If the polls are to be believed – and that’s a big IF – ASX energy stocks like the Woodside Petroleum Limited (ASX: WPL) share price could be in for a tougher 2021.

The odds of Joe Biden unseating Donald Trump at the upcoming US presidential election just got better after the incumbent caught COVID-19.

A Biden presidency isn’t a bad thing for the S&P/ASX 200 Index (Index:^AXJO) or global equities, but the same may not be said for the oil market.

ASX oil stocks facing the Biden blues

The oil price is already under pressure with the Brent crude benchmark falling to under US$40 a barrel when it was hovering near US$70 a barrel at the start of 2020.

This explains why the ASX energy sector is underperforming the broader market. The Oil Search Limited (ASX: OSH) share price crashed by 65%, the Woodside share price lost more than half its value and Santos Ltd (ASX: STO) tumbled 43% since January.

As mentioned, there may be no light at the end of the tunnel if Biden takes over the White House. There are two significant consequences for the oil market under a Biden presidency, according to the Financial Times.

Two big impacts from a Biden presidency

The first is obvious. Biden committed to re-joining the Paris Climate Agreement, pledged to spend US$2 trillion on clean energy and decarbonise the US economy.

His policy stands in sharp contrast to Trump, which has gone out of his way to support US oil and prop up the US shale producers.

The other impact from a Biden win is the possible dismantling of the OPEC+ production cuts. OPEC, led by Saudi Arabia, struck a deal with other major oil exporters like Russia to limit supply of crude to artificially put a floor to prices.

But Saudi Arabia was reluctantly dragged into the deal in April by Trump, who threatened to suspend US military support to the country.

Combustible mixture of oil and politics

Trump did this to win support in key battleground states that rely on the US shale industry, while the Saudis abandoned their resolve to teach Russia a lesson for not sticking to quotas.

The FT speculates that Biden won’t be so quick to pursue a similar policy as the clean energy transition becomes his top priority.

Adding fuel to the fire

What’s more, President Biden will likely reopen Iran’s oil spigots – adding additional supply to a market experiencing weak demand.

Biden indicated he will recommit the US to the international nuclear agreement with Iran. This will pave the way for sanctions against the country to be lifted for the first time since 2018.

Oil investors should be on alert. A Democrat victory will have both short- and medium-term negative implications for the sector. These risks are not priced into markets.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX energy stocks like Woodside (ASX:WPL) not pricing in a Biden win appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!