Yesterday we reported that there is a small, but not improbable, chance that Trump could end up becoming OPEC's best friend should the president elect seek to undo Obama's landmark foreign policy deal, the Iran Nuclear Agreement: "suddenly there is a ray of hope in OPEC's dark world, and it comes courtesy of president-elect Donald Trump, who just may eliminate as much as 1 million barrels of OPEC oil output, or the cartel's entire excess production, should he undo the deeply unpopular within GOP circles Iran nuclear agreement, which would also collapse Iranian oil exports and send the price of oil surging."

It remains to be seen if Trump has changed his view on the Iran deal, and certainly if he would engage in an action that would benefit Saudi Arabia while making millions of US motorists sad once gas prices spike should Iran's 1mmbpd in excess oil supply be taken offline.

Some of our readers pointed out that far from sending the price of oil spiking, there was an alternative explanation, to wit:"if there is a possibility, however slight, of the Iran nuclear deal being torn up in 68 days on 20 January 2017, then what does this mean for Saudi Arabia and the upcoming OPEC negotiations?"

It does 4 things:

1. Further highlights the importance of collective OPEC cuts
2. Encourages Iran to produce MORE not LESS oil
3. Further reduces the likelihood of a material deal
4. Reduces likelihood of material cuts from Saudi Arabia, for if they cut and the Iran deal is torn up, then they will have given away market share that will be reclaimed by Libya, Nigeria, Iraq and Russia

On Friday, Fitch's BMI unit issued a report that corroborated this more bearish perspective on oil as a result of the Trump presidency. According to BMI, "prospects for OPEC members to agree on an output cut or freeze have “reduced notably” following Donald Trump’s victory at the U.S. elections."

According to the analysis, BMI now expects a 45% probability of a “wait-and-see” stance and no deal on Nov. 30, vs previous forecast of 25% chance.

The Fitch research unit now also sees only a 15% chance the group will agree on an output cap of 32.5m-33m b/d, and 40% odds for a watered-down agreement, in other words a roughly one in seven chance that the Algiers deal will be implemented as presented.

The change in BMI's expectations was prompted by prospects for a stronger recovery in the U.S. shale sector, backed by a Trump presidency.It notes that the new administration could revitalize the country’s oil, gas sector over and beyond 2017, boosting output. A rollback in emissions policies, relaxation of drilling regulations and approval of key midstream projects are likely.

BMI also says that OPEC would not have factored in a Trump victory and a favourable legislative and fiscal environment for U.S. mid and upstream projects during the meeting in Algiers, when the output freeze was proposed, and as such the calculus that was on the table in late September has been scrapped, with OPEC now facing only downside should it cut its own production as non-OPEC members, read shale, resume pumping at historical levels. As a result BMI concludes that a "Wait-and-see" outcome is most likely, until U.S. energy policy becomes clearer next year.

Whether that is the catalyst, or just the relentless strength in the US Dollar which traditionally pressures oil lower, but today crude has fallen below $43, to the lowest level since the start of August, undoing all of the Algiers gains, and then some.