Oil Prices Firm on Hopes of US Policy Support for Economic Growth

Oil prices have been on a rollercoaster ride in recent months, with geopolitical tensions and US foreign policy playing significant roles in their volatility. However, a glimmer of hope has emerged as investors anticipate US policy support for economic growth, leading to a firming of oil prices. This article explores the dynamics behind this trend and its implications for manufacturing enterprises and the energy sector.

The US economy, being the world's largest, has a substantial impact on global oil demand and consumption patterns. Expansionary fiscal and monetary policies can stimulate economic growth, thereby boosting energy demand (Blanchard and Gali, 2007). Conversely, contractionary policies can decrease demand. Monetary policy, through interest rate adjustments, affects oil prices by influencing the cost of borrowing for energy projects and consumer spending on fuel (Hamilton, 1983). A loose monetary policy, characterized by low interest rates, encourages investment in energy projects, increasing supply and potentially lowering prices. However, a tight monetary policy can have the opposite effect.

US energy policies, particularly those promoting renewable energy and reducing carbon emissions, have a significant impact on global oil supply dynamics. The shift towards cleaner energy sources reduces demand for oil, as seen in the decline of oil consumption in the US (Cao et al., 2020). This shift, coupled with increased domestic production, has led to a decrease in US oil imports, further influencing global supply dynamics (Gao et al., 2022). Additionally, stricter emission standards and regulations on oil and gas industries can lead to reduced production and exploration activities, further impacting global oil supply (Li and Chen, 2022).

Geopolitical tensions and US foreign policy significantly impact global oil prices and market stability. The launch of the Shanghai crude oil futures market, with its unique features like "international platform, net price trading, bonded delivery, and yuan pricing," has introduced new considerations for investment decisions in manufacturing enterprises. This market may play a crucial role in reducing the risk of crude oil price volatility and enhancing the stability of corporate investments. However, the influence of international crude oil prices and volatility on the investment decisions of manufacturing enterprises is complex and under-researched. The volatility of international crude oil futures prices can lead companies into dilemmas of blind expansion or conservative investment, affecting their future development. The Shanghai oil futures market's moderating role in this context is also under-explored.



In conclusion, the firming of oil prices on hopes of US policy support for economic growth is a positive sign for the energy sector. However, the complex interplay between geopolitical tensions, US foreign policy, and global oil prices requires a nuanced understanding for informed investment decisions. The Shanghai crude oil futures market offers a new avenue for companies to hedge against oil price risks, but its moderating role in corporate investment decisions is still under-explored. As the energy landscape evolves, investors must stay vigilant and adapt their strategies to navigate the uncertainties associated with global oil price volatility.